On Dec. 2, XRP surpassed Tether to reclaim its position as the third-largest cryptocurrency by market cap. XRP’s price surged by nearly 30%, reaching a multi-year high of $2.8. This is a comeback for XRP, which had fallen behind Tether after its protracted legal battle with the U.S. Securities and Exchange Commission (SEC). As of December 2024, XRP’s market cap is approximately $150 billion, putting it ahead of Tether and Solana (SOL).
XRP surpassed Tether by market cap and regained its 3rd position. Source: CoinMarketCap
However, the big question remains: Can XRP continue its upward momentum and potentially challenge Ethereum for the second-largest spot in the crypto market?
What Factors Led XRP’s Rally?
One major driver behind XRP’s price rally is the growing interest in XRP exchange-traded funds (ETFs). WisdomTree, one of the first companies to issue a spot Bitcoin ETF, has filed for an XRP-spot ETF with the SEC, alongside other firms like Bitwise and Canary Funds. If this ETF is approved, it could boost demand for XRP, mimicking the success Bitcoin has seen with its own spot ETF.
Additionally, the pro-crypto views of President-elect Donald Trump have helped fuel optimism in the market. Trump’s promises to support cryptocurrency and the potential resignation of SEC Chairman Gary Gensler have provided a sense of security for XRP investors, especially considering the SEC’s long-running legal battle with Ripple. Investors are now hopeful that the regulatory landscape will improve for XRP, opening the door for further growth.
Can XRP Overtake Ethereum?
Ethereum currently holds a market cap of around $440 billion, leading over XRP’s $150 billion. Ethereum has experienced a 54.47% increase in its market capitalization so far in 2024. On the other hand, XRP has seen a 348.70% increase in market cap year to date.
Comparison of XRP’s and Ethereum’s market cap on 1-day chart. Source: TradingView
To continue this upward momentum and surpass Ethereum, XRP would need to see substantial and sustained price increases.
A crypto influencer with username “venturefounder” identifies three critical resistance levels that XRP must overcome to potentially challenge Ethereum. Resistance levels are the price points where XRP might face difficulty in continuing its upward momentum.
Key resistance levels for XRP to challenge Ethereum. Source: venturefounder on TradingView
The first level of resistance is at 0.00019, which represents a 25.35% increase in value relative to Ethereum. If XRP breaks through this resistance, it could signal further price increases. The next level, at 0.00087, represents a 116.06% increase in value compared to Ethereum. Surpassing this level would demonstrate a more sustained uptrend in XRP’s price.
The most significant resistance level is at 0.00242, representing a 326.48% increase in value. If XRP manages to surpass this level, it would be closer to challenging Ethereum.
The charts show that XRP is having a good run, but it still has a long way to go to catch Ethereum in market cap. Right now, XRP’s market cap is much smaller than Ethereum’s, so even if XRP rises in price, it would still need a huge boost to surpass Ethereum.
These projections make it clear that XRP would need a massive price increase to even begin to challenge Ethereum, as Ethereum’s current market cap is about three times larger than XRP’s.
Analysts Warn of Leverage-Driven Rally
Amid all these speculations, analysts are cautioning that XRP’s ralley might be fueled by leverage. According to data from CryptoQuant, open interest in XRP, which measures the total value of outstanding derivatives positions, has spiked by 37%.
Analyst says that XRP’s rally is driven by leverage. Source: X
A rise in open interest often signals that traders are using borrowed money to take large positions, which can lead to volatility. In the past, such leverage-driven rallies have resulted in sharp corrections, and analysts warn that the current XRP surge could face a similar fate.
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