Is XRP Trading Below Its True On-Chain Value?

The question of whether XRP is undervalued has taken center stage in 2025, as on-chain metrics and institutional catalysts clash with a bearish price trend. While XRP's price has declined by 5.2% to $2.30 in Q4 2025, on-chain data tells a different story: record-low exchange balances, bullish volume indicators, and a surge in network activity. This article dissects the disconnect between price and fundamentals, using historical price cycles and supply distribution trends to assess XRP's true on-chain value.

On-Chain Momentum: A Bullish Reversal?

Recent on-chain analytics suggest XRP is entering a critical inflection point. Exchange balances-the number of XRP tokens held on centralized exchanges-have hit record lows, with over 216 million XRP (worth $556 million) withdrawn in a single week. This exodus signals a shift from speculative trading to long-term holding, a pattern historically linked to price breakouts.

The Cumulative Volume Delta (CVD), a metric measuring net buy-sell pressure, has flipped bullish for the first time in months. This reversal indicates that buyers are overpowering sellers, a sign of growing conviction among market participants. Meanwhile, active XRP addresses-a proxy for network utility-have reached a three-month high, a trend that has historically preceded upward price movements.

Institutional adoption is further amplifying these signals. Canary Capital's XRPC ETF, the first U.S.-listed spot XRP ETF, launched on November 13, 2025, with $245 million in inflows and $58.6 million in first-day trading volume. Structured as a grantor trust, the ETF provides direct exposure to XRP, attracting pension funds and hedge funds seeking regulated crypto assets. Analysts project that up to $8 billion could flow into XRP ETFs in the first year alone, tightening liquidity and potentially triggering a supply shock.

Historical Price Cycles: A Fractal Pattern?

Comparing XRP's 2025 trajectory to its 2017 and 2021 bull cycles reveals both similarities and divergences. In 2017, XRP surged from $0.097 to $3.84 within three months, while in 2021, it rose from $0.45 to $1.90 in two months. A statistical model by Egrag Crypto shows an R-squared value of 0.84754 between XRP's 2025 price movements and these historical cycles, suggesting a high probability of a similar fractal pattern.

However, the 2025 market structure differs. In 2017, retail-driven speculation fueled euphoria, with the XRP/BTC pair trading 90% below its 2017 peak. Today, long-term holder sentiment is in a "Belief–Denial" phase, and the Market Value to Realized Value (MVRV) ratio remains significantly lower than during prior bull runs. This subdued MVRV ratio-calculated by Glassnode-indicates that XRP is trading below its historical fair value, as holders remain near break-even points rather than realizing gains.

The ETF Catalyst: A New Paradigm

The launch of XRPC and nine additional XRP ETFs in Q4 2025 marks a structural shift. Unlike 2017's retail-driven dynamics, these ETFs provide institutional-grade access to XRP, with $4–8 billion in projected inflows. This influx of capital could tighten XRP's exchange supply, creating upward pressure as liquidity dries up. For context, Evernorth Holdings recently acquired 95% of its XRP target (388.7 million tokens), generating unrealized gains of $46–75 million. Such institutional accumulation suggests confidence in XRP's undervaluation.

Yet, on-chain fundamentals remain mixed. Daily payment volume has fallen below the critical 1 billion XRP threshold, with transaction counts dropping to 686,000 in late November-a 50% decline from earlier in the year. This reduction in utility raises questions about XRP's role in the ecosystem. However, the ETF-driven demand may offset this weakness by creating a new narrative: XRP as a regulated, institutional asset rather than a utility token.

Valuation Discrepancies: The Case for a Rebound

The disconnect between XRP's price and on-chain metrics points to a potential valuation gap. While the price has stagnated near $2.17, whale activity-such as a $716 million on-chain transfer-suggests significant positioning for a breakout. Technical indicators like the RSI remain bearish, but historical correlations imply a 300%–1,400% gain is possible if XRP follows its 2017 or 2021 playbook.

Critically, the ETF-driven supply shock could force a re-rating. With only 216 million XRP on exchanges, even modest inflows could create scarcity. For example, if $4 billion flows into XRP ETFs, the token's market cap could rise by 15–20%, assuming a 10% price increase. This scenario assumes continued institutional adoption and regulatory clarity, both of which are now more likely with the SEC's approval of spot XRP ETFs.

Conclusion: A High-Conviction Bet

XRP's on-chain metrics and ETF-driven demand suggest it is trading below its true value. While the price has underperformed due to broader market weakness, the reduction in exchange supply, bullish CVD, and institutional inflows create a compelling case for a rebound. However, risks remain: the decline in transaction volume and the absence of a clear use case could limit upside. For investors, the key is to balance the bullish on-chain signals with the bearish price action, recognizing that XRP's valuation may hinge on its ability to transition from a speculative asset to a regulated institutional staple.