Can XRP Reclaim Its Position as the Second-Largest Cryptocurrency by Market Cap?

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.

XRP price surged on Dec. 2, reclaiming its position as the third-largest cryptocurrency by market cap after a multi-year high price surge of nearly 30%.

This marks a significant comeback for XRP, which had fallen behind Tether after its legal battle with the U.S. Securities and Exchange Commission (SEC). As of December 2024, XRP’s market cap stands at approximately $150 billion, surpassing Tether and Solana (SOL).

However, the 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). Several firms, including Bitwise, Canary Funds and WisdomTree, have filed with the SEC to launch an ETF that would directly hold XRP.

If approved, this could boost demand for XRP, much like how Bitcoin has seen increased demand following the approval of a spot Bitcoin ETF.

Additionally, the pro-crypto stance of President-elect Donald Trump has helped fuel optimism in the market. Trump’s statements about supporting cryptocurrency and the potential resignation of SEC Chairman Gary Gensler have provided a sense of security for XRP investors, especially given the SEC’s 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 has a market cap of around $440 billion, while XRP’s market cap is at $144 billion.

Ethereum has seen 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.

To continue this upward momentum and surpass Ethereum, XRP would need to see substantial and sustained price increases.

One crypto influencer, known as “venturefounder” on Twitter, has identified 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.

The first level of resistance is at 0.00019, which shows 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, shows 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, which shows a 326.48% increase in value. If XRP manages to cross 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 rally 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%.

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.