XRP May Be Worth $18036 Each If It Becomes the Global Transaction Standard, DCF Analysis Shows

Recent evaluations indicate that XRP’s current market price may not accurately reflect its intrinsic worth when analyzed under a discounted cash flow (DCF) framework.

Recent evaluations, notably those analyzed within a discounted cash flow (DCF) framework, suggest that XRP's current market price may not fully capture its potential worth. According to an analysis conducted by Silvercliff Partners and referenced by Valhil Capital in 2023, if future assumptions hold, each XRP token could be valued at approximately $18,036. This estimation is not intended as a prediction of future market prices but rather as an assessment based on established financial principles.

Examining Historical Performance and Regulatory Considerations

Following a period of significant price appreciation during 2017–2018 — which saw XRP reach peaks above $3.80 — the digital asset experienced a period of underperformance relative to broader market trends. This trend continued into the 2020–2021 market cycle, with XRP struggling to regain even the modest price levels seen in earlier years.

Various explanations have been offered by analysts for this trend, with some highlighting regulatory challenges — such as the lawsuit initiated by the U.S. Securities and Exchange Commission against Ripple in December 2020 — as a potential suppressing factor. There have also been suggestions that periodic sales of the asset by Ripple may have influenced its market dynamics. However, these assertions have been strongly contested by Ripple's Chief Technology Officer, who maintains that such factors do not account for the asset's historical stagnation in price.

Methodology of the DCF Model Applied in the Analysis

The DCF model used in this analysis to evaluate XRP's potential aims to estimate the present value of anticipated future cash flows generated by global transaction volumes, assuming that XRP will be increasingly utilized as a medium for financial transactions on a worldwide scale.

The model begins with a base assumption of global transaction volume at $104 trillion and an annual economic growth rate of 2%. A discount rate of 10% is applied to account for investment risks and the time value of money, adjusting future cash flows to their present-day value.

A critical component of the model is the projected increase in the token's adoption over the next decade. The analysis assumes that XRP's adoption will start at a modest level of 2% and gradually rise to 100% by the year 2031. Using these parameters, the model calculates the overall present value of XRP's projected transaction volume to be approximately $915 trillion. When divided by the circulating supply of 50.7 billion tokens, this yields a per-token valuation of around $18,036.

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Limitations and Interpretations of the Analysis Results

While the DCF approach provides a structured method for evaluating XRP's potential as a transactional asset, it does have limitations. For instance, the model does not consider scenarios where XRP tokens may be withdrawn from active circulation and held as a store of value. A reduction in the circulating supply could further impact price, potentially leading to higher valuations.

Moreover, the assumptions regarding adoption rates and the selection of the discount rate carry inherent uncertainties. As a result, the estimated fair value should be viewed as a theoretical benchmark rather than a definitive forecast of future market prices.

This analysis, based on discounted cash flow principles, offers a contrasting perspective on the potential market value of XRP. If the assumptions regarding global transaction volumes and gradual adoption are realized, the asset's intrinsic value could significantly exceed its current trading levels. As always, investors and market analysts are advised to consider both the methodological strengths and the inherent uncertainties of this model when assessing XRP's long-term prospects in the digital asset landscape.