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ToggleThe market capitalization of XRP is currently 2,200 times higher than the Total Value Locked (TVL) on XRPL, reflecting strong speculation from traders.
Since November, XRP (XRP) has increased by over 600%, bringing its market capitalization to around $190 billion, driven by expectations of a Ripple lawsuit settlement, greater clarity on the legal framework in the US, and momentum around ETF products.
However, with this dizzying growth rate, the question is whether XRP's fundamental factors are strong enough to catch up with the price increase. Let's analyze this more carefully to find the answer.
XRP Valuation 2,200 Times Higher Than Total Value Locked
As of Monday, XRP's Primary Network, XRP Ledger (XRPL), recorded a Total Value Locked (TVL) of $87.74 million, according to data from defillama.
The trading volume on XRPL's DEX in the past 24 hours was only $49,621, while fee revenue from applications was a mere $1,467. With these figures, XRP's market capitalization is approximately 2,200 times higher than its DeFi TVL and nearly 363,000 times its annual fee revenue.
For XRP investors, this valuation reflects a strong belief in XRPL's future development potential, expecting significant growth in payment volume, stablecoin activity, corporate fund allocation, and ETF capital inflows. They believe these factors will be sufficient to justify the current price, even though on-chain usage remains relatively modest at this time.
XRPL currently holds a total of $175.9 million in crypto assets, a 52.25% increase in just one month, according to data from RWA.xyz. This portfolio mainly consists of US Government debt ($120.6 million), listed company stocks ($55.4 million), real estate ($4.3 million), and stablecoins ($67.3 million).
XRP Price Divergence Warns of Potential 25% Adjustment
From a technical perspective, XRP's recent surge is showing signs of slowing down. The increasingly clear bearish divergence between price movement and the Relative Strength Index (RSI) indicates that buying pressure is weakening despite the price remaining high, a pattern that historically often leads to correction periods. If this scenario repeats, XRP could face an initial adjustment towards the 20 EMA line on the 2-week chart (purple) around $2.32 in September, corresponding to a drop of over 25% from the current price.
A similar scenario occurred in the 2017-2018 cycle, when bearish divergence signals appeared and triggered a sharp drop. The $2.32 mark is particularly noteworthy this time because it coincides with XRP's average execution price over the past six months, the price at which most investors have recently bought in, serving as an important technical and psychological support zone.
XRP's execution price could act like a "magnet" if the upward momentum weakens, pulling the price back to test this zone and thereby eliminating weak-handed investors before the market enters a new recovery phase. Nevertheless, some technical analysts remain optimistic, believing that XRP could potentially reach $10 in the coming months if the upward trend is maintained and supporting factors continue to converge.
This article does not contain investment advice or recommendations. All investments and trades involve risks, and readers should conduct their own research when making decisions.
