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Is XRP Overpriced to Buy at This Time?
XRP has increased by more than 600% since November, reaching a market capitalization of around 190 billion dollars, as the market assesses the resolution of the Ripple lawsuit, regulatory clarity in the United States, and the growing momentum of ETFs.
But with such a rapid price increase, will the fundamentals of XRP keep up with the price? Let's take a closer look. The Valuation of XRP is 2,200 Times Higher Than TVL As of Monday, the parent chain of XRP, XRP Ledger (XRPL), has a total value locked (TVL) of $87.74 million, according to DefiLlama.
The trading volume on the decentralized exchange (DEX) of XRPL is $49,621 in the past 24 hours, while the application fee is only $1,467. Based on this data, the market capitalization of XRP is more than 2,200 times the DeFi TVL and about 363,000 times the annual fee revenue. For XRP speculators, the current valuation reflects confidence in the future growth of XRPL: payment volume, growth of stablecoins, company's treasury allocation, and ETF capital flows will increase significantly. In their view, these motivations will justify the current price, even though on-chain usage is still relatively modest at this time. According to data from RWA.xyz, XRPL holds $175.9 million in tokenized assets, a 52.25% increase in one month, led by US Treasury bonds (120.6 million ), public stocks (55.4 million ), real estate (4.3 million ), and stablecoins (67.3 million ).
This rapid growth rate is ranked among the fastest in the field of real-world asset tokenization (RWA), indicating the potential for use cases that could drive demand for XRP in the future. XRP is said to be far behind the leading layer 1 blockchain, Ethereum. As of Monday, the market capitalization of Ethereum has reached over 516 billion dollars, with a TVL of 92.06 billion dollars and generating 10.48 million dollars in daily application fees. Ethereum also leads the RWA rankings with 7 billion dollars in managed projects.
This makes the market capitalization/TVL ratio of Ethereum reach 5.6 and the market capitalization/annual fee ratio reach 135, much lower than that of XRPL. However, XRP is traded at nearly 40% of the market capitalization of Ethereum, leading some analysts to call it "overvalued."
XRP Bearish Divergence Indicates 25% Correction Level Technically, the recent price increase of XRP shows signs that the upward momentum is slowing down. The increasing bearish divergence between the price and the (Relative Strength Index) indicates that buying pressure is weakening even as prices rise, a setup that often precedes corrections. XRP may face an initial pullback to the 20-2W EMA; the purple wave near $2.32 in September, down more than 25% from the current price.
A similar decline occurred after the bearish divergence signal in the 2017–2018 cycle. The $2.32 level is even more noteworthy because it is close to the actual price of XRP over the past six months, essentially representing the average price at which current holders purchased their tokens during that time.
The actual price of XRP can act as a magnet if the momentum fluctuates, with the potential retracement eliminating weaker users before any recovery occurs. However, some technical analysts still believe that the price of XRP will rise to 10 dollars in the coming months. This article does not contain investment advice or recommendations. All investment and trading moves carry risks, and readers should do their own research before making decisions.