Author of the original text: Sam Ruskin, Messari Analyst

Original text compiled by: Luffy, Foresight News

I would like to make a few points first:

• I am certainly not the first person to put forward this view, but a few days ago, I started to firmly believe that it is entirely possible for XRP to surpass ETH.

• I believe that XRP or ETH are both undervalued at their current prices, but I am not here to discuss what I think their valuations should be.

In the months following the US election, XRP has experienced a clear upward trend. Since then, the price of XRP has risen by over 460%, and its market capitalization has surpassed BNB, USDT, and SOL. Calculated on a fully diluted valuation (FDV) basis, the valuation of XRP is twice that of Solana and about two-thirds of Ethereum.

Source: Messari

It can be said with certainty that no cryptocurrency has benefited as much from this election as XRP.

Source: Messari

But I am not here to discuss BNB, SOL, or USDT, as they have already been surpassed by XRP. Ethereum (excluding Bitcoin, which I hope I never have to write a similar article about) is the last one that has not yet been surpassed.

Quantitative Analysis of ETH and XRP

Source: Coinglass

Based on various indicators, Ethereum appears to be overvalued. The open interest is at an all-time high, while the ETH price is still down 30% from its historical high of $4,800.

Source: Coinglass

On the other hand, the open interest of XRP is much healthier and more correlated with its price movement.

Due to the complexity of options, the open interest in the cryptocurrency market is generally more associated with crypto-native investors than retail investors. This suggests that the on-chain demand for Ethereum is relatively saturated.

Source: Coinglass

The market capitalization of Ethereum ETFs accounts for 3% of Ethereum's total market capitalization, while the market capitalization of Bitcoin ETFs accounts for nearly 10% of Bitcoin's total market capitalization. Retail enthusiasm for Ethereum is not as high as for Bitcoin, which has impacted the on-chain sentiment.

Source: Artemis

Over the past few years, Ethereum's L1 has faced numerous challenges, with competitors including Solana, Sui, and even its own L2 solutions like Base. The Ethereum community is still divided on whether the economic growth of L2 is parasitic or essential to L1. Regardless of which view is correct, this capital outflow is a concerning trend for ETH.

Looking at the price movements of XRP and Ethereum over the past year, it is difficult to find a reason to buy Ethereum. As @mikeykremer said in his well-thought-out article: "Buy strength, sell weakness." Market indicators suggest that the current interest in XRP is higher than the interest in ETH.

Over the past 6-12 months, the sentiment towards ETH on crypto Twitter has clearly declined. After the failed Blast airdrop, it is evident that the L2 ecosystem of Ethereum is oversaturated, and the capital and development work of the Ethereum community have been misallocated.

Source: Dune (2 1co)

When comparing active addresses and transaction volumes, Base is significantly ahead, becoming the most popular L2 on Ethereum.

Comparing the top two L2s by total value locked (TVL), Base has reached a TVL of nearly $4 billion in a year and a half, while Arbitrum has a TVL of $3 billion in three and a half years. From almost all indicators, Base is the leading L2 on Ethereum.

Qualitative Analysis of ETH and XRP

The L2 expansion roadmap (modular blockchain design) aims to achieve decentralization as much as possible by using multiple Rollups and L2s to increase throughput. Overreliance on a single chain goes against the core objectives of Ethereum, but Base is also Ethereum's last hope to ensure on-chain activity. This is a negative feedback loop, and I currently don't see a way out (unless Base becomes the sole representative of Ethereum).

On the other hand, XRP has almost no similar internal contradictions in its protocol roadmap. Instead, its community is united in the belief that XRP will play a core role in the future of finance. Unless this belief is falsified or validated (which could drive up the price of XRP), its core supporters are unlikely to waver.

Furthermore, I believe there are four potential factors that could drive up the price of XRP in the coming weeks:

• Trump's inauguration: Given the recent bullish momentum from macroeconomic signals, Trump's inauguration appears more like a buy-in event. Since Trump is involved in a crypto event, figures like Garlinghouse may also attend, which could bring more attention to XRP.

• ETF applications: XRP has not yet applied for an ETF. Considering the price surges that occurred when ETH, SOL, and BTC announced ETF applications, a similar effect could occur if XRP applies for an ETF.

• Capital gains tax policy: Proposed crypto policies, such as the elimination of capital gains tax for US corporations, may drive demand for XRP due to tax considerations. As a US-based project, XRP may attract capital reallocations due to potential tax advantages.

• "Boomer investor" coin rotation: Coins like XRP, HBAR, XLM, and ADA saw significant price increases shortly after Trump's election. A similar trend may occur around the inauguration, as this may attract buyers with similar interests and preferences.

Risks

To cut a long story short, I am not trying to encourage XRP's short-sellers:

• People come to their senses and realize that XRP is overvalued, which it is. Fortunately, the entire cryptocurrency market is overvalued, so XRP is not particularly outstanding in this regard.

• Garlinghouse's activity in the White House is not as high as some people expected. He did vote for Kamala, but XRP is still perceived as the "Trump coin," which shows how easily investors can forget.

• An alternative banking solution replaces XRP, whether it's a crypto-based stablecoin or something entirely new.

Time Window

I am focused on short-term trading opportunities, potentially around a month after the inauguration. We are now seeing a lot of front-running in these price movements, but I expect XRP surpassing ETH to occur after Trump's inauguration.

Assuming ETH's price increase is slower than XRP's, I expect XRP to have an additional 35-50% upside from the current level.