Is XRP Price Undervalued Relative to Ripple’s $40B Valuation and XRPL Utility?

The idea that XRP is “undervalued” comes up frequently in crypto markets, especially when Ripple announces new partnerships, acquisitions or infrastructure upgrades. But unlike stocks, XRP does not generate cash flows, dividends or earnings. That makes valuation less straightforward and often misunderstood.

As of Jan. 11, 2026, XRP is trading near $2.06, with an estimated market capitalization of roughly $125 billion and a circulating supply of about 60.7 billion XRP. While exact figures vary slightly across data providers and exchanges, these numbers place XRP firmly among the largest digital assets by market value.

The central question remains:

Is XRP’s current price accurately reflecting Ripple’s business growth and the real-world utility of the XRP Ledger (XRPL)?

The answer depends less on headlines and more on how XRP is actually used and whether that usage creates durable demand.

Understanding the Relationship Between Ripple, XRP and XRPL

Before discussing valuation, it’s essential to understand how these three entities connect and where they are independent.

• XRPL (XRP Ledger) is a public, open-source blockchain network.
• XRP is the native digital asset of XRPL, used to pay transaction fees and often as a bridge asset for liquidity.
• Ripple is a private company that builds payment, liquidity and custody infrastructure, historically associated with XRP but not in control of XRPL.

This distinction matters for valuation. Ripple can grow as a company even if XRP price stagnates, particularly if that growth does not require holding or using XRP at scale.

How Crypto Assets Are Valued: Practical Models for XRP

Traditional valuation models like discounted cash flow do not apply to XRP. Instead, analysts rely on network-based and monetary models that better fit blockchain assets.

Quantity Theory of Money: MV = PQ (Adapted for Crypto)

A commonly used framework is a version of the monetary identity:

Market Value (M) = Economic Activity on the Network (P × Q) ÷ Velocity (V)

• If more economic value is settled using XRP, market value can rise.
• If XRP moves rapidly from one holder to another (high velocity), less XRP needs to be held, which can limit price appreciation.

XRP can be very useful as a fast bridge asset, but if it’s only held for seconds at a time, massive transaction volumes are needed to justify a much higher price.

Network Value and Metcalfe-Style Effects

Network-based valuation models assume that value grows as usage grows. Common indicators include:

• Active accounts
• Transaction counts
• Liquidity depth on native markets
• Sustained fee usage

XRPL is designed to be fast and inexpensive. Transaction fees are burned, reducing supply slightly, but fees are intentionally minimal and primarily act as an anti-spam mechanism not a revenue or value-capture model like Ethereum gas fees.

This means fee burn alone is not a meaningful valuation driver for XRP.

NVT Ratio: A Reality Check Tool

The Network Value to Transactions (NVT) ratio compares market capitalization to transaction value settled on-chain.

• High NVT can suggest the asset is priced ahead of usage.
• Low NVT can indicate undervaluation, if transaction data reflects real economic activity.

For XRPL, NVT must be interpreted carefully, as exchange flows and internal transfers can distort raw transaction figures.

Ripple’s Business Growth: What Actually Matters for XRP

Ripple’s recent moves focus heavily on institutional infrastructure, which could, but does not automatically, increase XRP demand.

Institutional Plumbing and Prime Brokerage

Ripple’s $1.25 billion acquisition of Hidden Road, a prime broker clearing roughly $3 trillion annually for more than 300 institutional clients, is one of its most significant moves.

This matters because institutional trading, custody and settlement infrastructure can create consistent, high-volume liquidity needs. XRP benefits only if it becomes embedded in these flows as a required asset rather than an optional bridge.

Stablecoins, RLUSD and Payment Rails

Ripple launched RLUSD, its U.S. dollar-backed stablecoin, in December 2024 on XRPL and Ethereum. It also acquired Rail, a stablecoin payments platform, to strengthen compliance-ready settlement infrastructure.

Stablecoins increase on-chain activity, but they can also reduce reliance on volatile assets like XRP if used as substitutes rather than complements.

In short: stablecoin growth helps XRPL activity, but only helps XRP price if XRP remains central to liquidity routing.

XRPL EVM Sidechain and Programmability

The XRPL EVM sidechain, launched on mainnet in June 2025, allows Ethereum-compatible smart contracts to operate within the XRPL ecosystem.

This expands developer access and enables DeFi, tokenization and institutional use cases. However, programmability alone does not guarantee XRP demand. The key question is whether these applications require XRP for liquidity, collateral or settlement.

XRPL’s Integration With Amazon Bedrock AI

Ripple is exploring Amazon Bedrock, AWS’s generative AI platform, to improve how the XRPL is monitored and maintained. The integration focuses on AI-powered analysis of XRPL system logs, helping engineers detect issues and anomalies in minutes instead of days. 

Importantly, this is an off-chain, operational use of AI, it does not change XRPL’s decentralized protocol or consensus. The goal is to boost network reliability, scalability, and developer efficiency as XRPL adoption grows, especially for institutional and enterprise use cases.

Ripple vs. XRP: Understanding the Difference in Value

Ripple and XRP are often mentioned together, but their values represent two very different things. XRP is a cryptocurrency that trades on open markets, with its price determined by supply, demand, and overall crypto market sentiment. As of Jan 2026, XRP has been trading around the $2 range, giving it a market capitalization of well over $100 billion, depending on price fluctuations.

Ripple, on the other hand, is a private company (Ripple Labs) that builds payment and settlement infrastructure using blockchain technology, including the XRP Ledger. Ripple does not have a public stock price. Instead, its worth is measured through private market valuations, which have recently placed the company at approximately $40 billion based on funding rounds and secondary share sales.

This distinction is important: XRP’s market value does not equal Ripple’s valuation. XRP can rise or fall independently of Ripple’s business performance, while Ripple’s valuation reflects investor confidence in its enterprise products, partnerships with banks, and long-term revenue potential. While the two are closely linked by ecosystem and branding, they are financially and structurally separate assets.

XRPL Utility: What Investors Should Actually Track

Technical Capabilities Are Not the Same as Economic Value

XRPL consistently demonstrates:

• Transaction finality of roughly 3–5 seconds
• Throughput often cited around 1,500 transactions per second

These are strong technical metrics, but markets price economic usage, not potential.

Indicators That Matter for XRP Valuation

Investors should focus on:

1. Sustained transaction activity, not short-term spikes
2. Liquidity depth on XRPL-native DEXs and AMMs
3. Evidence of XRP being required, not optional, in settlement flows
4. Institutional usage that persists over months or years

Transaction counts nearing one million per day during peak periods are notable, but valuation depends on consistency and value transferred, not just volume.

XRP Supply Dynamics and Escrow Misconceptions

Ripple’s escrow system releases up to 1 billion XRP per month, with unused portions typically re-locked.  In practice, Ripple typically uses only a fraction of the released XRP for operational purposes, such as funding ecosystem development, liquidity programs, or strategic partnerships, and re-locks the unused portion back into escrow at the end of each month.

This structure means that:

• Escrow releases represent availability, not automatic selling.
• Actual market impact depends on how much XRP is distributed and how it is sold (for example, over-the-counter versus open exchanges).
• The net increase in circulating supply is often far smaller than headline figures suggest.

This is often misunderstood. These releases do not equal automatic selling. However, perceived supply overhang can still influence market sentiment, especially during weak demand periods.

Is XRP Undervalued as of January 12, 2026?

The Case for Undervaluation

XRP may be undervalued if:

• Ripple’s institutional stack channels settlement and liquidity onto XRPL.
• XRP is required as inventory or collateral within those flows.
• XRPL usage grows in economically meaningful ways.
• Velocity decreases as institutions hold XRP for operational purposes.

In this scenario, the MV = PQ / V relationship works in XRP’s favor.

The Case Against Undervaluation

XRP may be fairly valued, or even overvalued, if:

• Ripple’s growth increasingly relies on stablecoins and infrastructure that bypass XRP.
• XRPL activity grows without corresponding XRP demand.
• Liquidity remains concentrated off-chain.
• XRP remains a short-duration bridge asset with high velocity.

In this case, utility does not automatically translate into higher price.

Practical Checklist for XRP Investors

To judge whether XRP is truly undervalued, track these trends together:

• Sustained XRPL economic activity.
• Deepening on-chain liquidity.
• Structural demand for XRP itself.
• Institutional adoption beyond pilots.
• Clear understanding of supply releases.

If these align, valuation may shift. If not, price may lag utility.

Is XRP a Necessity or an Option?

As of Jan. 12, 2026, the strongest argument that XRP is undervalued is not speed, fees or hype, but the possibility that Ripple’s expanding institutional infrastructure ultimately requires XRP as a core liquidity asset.

The strongest counterargument is equally simple:

XRPL can grow, Ripple can succeed, and XRP price can still remain constrained if the token is not structurally required. For instance, the XRPL is designed to handle various tokens, including stablecoins and central bank digital currencies (CBDCs). Financial institutions may prefer the price stability of a ‘cbdc’ issued on the XRPL over the volatility of XRP.

Similarly, Ripple as a company can generate massive revenue through software licensing and private ledger services without ever requiring their clients to touch the public XRP token. This creates a scenario where the network thrives, but the token remains a speculative asset rather than a functional necessity.

Ultimately, XRP’s valuation is currently a bet on structural design. If Ripple can prove that the network is significantly more efficient when XRP is used as the core liquidity asset, the “undervalued” argument gains immense weight. If the world moves toward stablecoins on the XRPL, the token may struggle to find a fundamental price floor.

That tension defines XRP’s valuation debate and will likely continue to do so.

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About the Author

Dr. Guneet Kaur

Dr. Guneet Kaur is a senior editor at CCN.com and a Science Fellow at Exponential Science. She is a fintech and blockchain expert with extensive experience in digital finance education, blockchain ecosystems, and cryptocurrency markets. She has worked with global media such as Cointelegraph, as well as education and blockchain platforms, to design and lead strategic content and learning initiatives. As an educator and assessor for top-tier executive programs, she bridges real-world fintech trends with academic insight.

Dr. Kaur is also a published researcher and peer reviewer across fintech and data science journals, including Financial Innovation Journal and International Journal of Big Data Intelligence and Applications. Her work spans data-driven analysis, Web3 innovation, and technical content development. With a strong foundation in both industry and academia, she translates complex financial technologies into practical applications, empowering learners, professionals, and institutions across the rapidly evolving digital finance landscape.

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