Is XRP Overvalued at Today's Price?

XRP (CRYPTO: XRP) is priced around $1.28 today, with an $80 billion market cap, and a horde of loyal holders -- not to mention a few detractors. Skeptics argue that the coin is overvalued due to suboptimal tokenomics, whereas bulls point to the working financial infrastructure of the XRP Ledger (XRPL), which is swelling with new capital onboarding to the chain in the form of tokenized assets.

Let's unpack both of these perspectives and determine whether the coin's valuation today is appropriate, or if it's on the rich side.

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The tokenomics problem is hard to argue with

The argument for XRP being overvalued is essentially that, due to its tokenomics, the link between anything that the XRPL accomplishes in terms of adoption, and those accomplishments resulting in returns for holders of XRP, is too weak for the coin to be worth much of anything.

The factual basis of this argument is that every transaction on the network burns a base transaction fee of 0.00001 XRP. For most of the last 12 months, a typical load has been between 1 million and 2 million transactions per day. On June 14, 295 XRP were burned due to a combination of transaction activity and new wallet creation. Since its inception in mid-2013, the ledger has burned a bit more than 14 million XRP. That's practically nothing against the 62 billion XRP in circulation, never mind against the maximum possible supply of 100 billion XRP.

So the bears are correct in saying that XRP's tokenomics mean that the coin's price will not mechanically be forced upwards as a result of its supply getting smaller from being burned due to activity. That means XRP could indeed potentially be extremely overvalued.

There's more to the story

The overvaluation argument is missing something that's likely to mean XRP will be more valuable in the future than it is today.

Ripple, XRP's issuer, has built a lot of different services around the ledger. It's also continuing to upgrade the ledger with new features and capabilities to attract more capital. Today, it hosts about $368 million in tradeable tokenized assets like stocks, bonds, and commodities, up from just $128 million a year ago. Aviva Investors and Societe Generale moved some operations onto the chain this year, and Deutsche Bank integrated Ripple's payments stack.

What's more, even if transaction-fee-related burning doesn't directly increase the price of XRP, its supply is still getting consumed by purchasing from spot XRP exchange-traded funds (ETFs), which have pulled in over $1.4 billion in net inflows since their late 2025 launch.

For now, Ripple's development work and future development plans for the XRPL are doing more work for XRP's valuation than its tokenomics, because they're creating a basis for optimism about the asset's future. The barely-there linkage between network activity and the coin's price is a headwind, but it could be changed. That means XRP is probably at least slightly overvalued today.

Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.