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The XRP fair valuation calculator presents a modest increase in XRP price, considering daily trading volumes up to $250 billion.
Notably, many have long viewed XRP as undervalued. Market commentators often attribute this undervaluation to external pressures, such as the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC).
This lawsuit, initiated in December 2020, has entered the appeal phase. In addition to this, speculation had risen that Ripple itself could be suppressing XRP’s price. However, representatives of the company have strongly debunked these claims.
Amid these debates, some industry leaders have made several attempts to estimate XRP’s fair market value. Among these efforts is a valuation framework developed at Stanford’s Graduate School of Business.
Originally devised by Professor Susan Athey and Robert Mitchnick, an MBA candidate, the model incorporates specific economic factors to project XRP’s potential value.
It has since been developed into a calculator that uses parameters such as daily transaction volume, transaction frequency, and discount rates to estimate fair pricing for XRP under different scenarios.
XRP Fair Values at $40B, $120B and $250B Daily Volumes
Using this tool, we sought projections for XRP’s fair market value at three different daily transaction volumes: $40 billion, $120 billion, and $250 billion. The data provided details on how XRP’s price might respond to an increase in utility and adoption, leading to higher volumes.
At a daily transaction volume of $40 billion, the calculator estimated XRP’s value at $2.43, slightly above its current trading price of $2.29. The calculation assumes XRP is transacted every 12 hours on average and considers a 1% interest rate to discount future value to the present.
If daily transaction volumes rise to $120 billion, the fair value increases to $3.10. This scenario extends the time horizon to two years, indicating the growth required to reach such a volume. However, even at this level, XRP’s valuation remains slightly below its 2018 all-time high of $3.31.
The top projection comes up at a $250 billion daily transaction volume. Under this scenario, the calculator estimates XRP’s value at $4.17. This projection assumes a two-year timeline. Interestingly, market analyst Ali Martinez insists XRP could claim the $4 price.
Assessment Criteria
The valuation model relies on several assumptions, including transaction frequency, the duration necessary to reach projected volumes, and the interest rate for discounting future value. It also factors in the potential for XRP to be a store of value akin to digital gold.
For context, XRP’s daily trading volume currently stands at $3.5 billion, per CoinMarketCap data. During the latest rally, XRP’s daily volume peaked at $22.6 billion on Nov. 16, far below the estimates. Nonetheless, this confirms that XRP has the capability to reach some of these levels if adoption grows.