XRP has risen over 600% since November, reaching a market capitalization of about $190 billion, as the market evaluates the resolution of the Ripple lawsuit, regulatory clarity in the U.S., and increasing ETF momentum.
But with such a rapid price increase, will the fundamentals of XRP keep pace with the price? Let's take a closer look.
XRP Valuation Value Is Over 2,200 Times Higher Than TVL
As of Monday, XRP's parent chain, XRP Ledger (XRPL), had a total value locked (TVL) of $87.74 million, according to DefiLlama.
Trading volume on XRPL's decentralized exchange (DEX) was $49,621 in the past 24 hours, while application fees were only $1,467.
Based on these metrics, XRP's market capitalization is over 2,200 times DeFi's TVL and about 363,000 times its annual fee revenue.
For XRP speculators, the current valuation reflects confidence in the future growth of XRPL: payment volume, stablecoin growth, company fund allocation, and ETF capital flows are expected to increase significantly.
In their view, these dynamics will justify the current price, even if on-chain usage remains relatively modest at this time.
According to data from RWA.xyz, XRPL holds $175.9 million in tokenized assets, a 52.25% increase over one month, led by U.S. Treasury bonds ($120.6 million), public equities ($55.4 million), real estate ($4.3 million), and stablecoins ($67.3 million).
This rapid growth rate ranks among the fastest in the world of Real World Asset (RWA) crypto, indicating that the scalability of use cases could drive demand for XRP in the future.
XRP is said to lag far behind the leading layer 1 blockchain, Ethereum.
As of Monday, Ethereum's market capitalization reached over $516 billion, with a TVL of $92.06 billion, generating $10.48 million in daily application fees. Ethereum also leads the RWA rankings with $7 billion in managed projects.
This brings Ethereum's market cap/TVL ratio to 5.6 and market cap/annual fee ratio to 135, much lower than XRPL.
However, XRP is trading at nearly 40% of Ethereum's market capitalization, leading some analysts to call it "overvalued."
XRP Bearish Divergence Indicates a 25% Correction
Technically, XRP's recent price surge shows signs of momentum slowing down.
The increasing bearish divergence between price and the relative strength index (RSI) indicates that buying pressure is weakening even as prices rise, a setup often preceding corrections.
XRP may face an initial pullback to the 20-2W exponential moving average (EMA 20-2W; purple wave) near $2.32 in September, a drop of more than 25% from the current price.
A similar decline occurred after a bearish divergence signal in the 2017–2018 cycle.
The $2.32 level is particularly noteworthy as it is close to XRP's actual price over the past six months, essentially the average price at which current holders purchased their tokens during that time.
The actual price of XRP could act like a magnet if the uptrend weakens, with a potential retest that would shake out weaker hands before any recovery. However, some technical analysts still believe that XRP's price could reach $10 in the coming months.