XRP is emerging as a strong competitor to overtake Ethereum (ETH) in market capitalization. The 2025 market outlook reveals several factors that suggest XRP could become the second-largest altcoin by market capitalization.
Recent data highlights three key reasons why XRP can achieve this goal. XRP's Fully Diluted Valuation (FDV) has exceeded ETH, capital is moving from ETH to XRP, and investor sentiment towards XRP is increasing.
XRP Fully Diluted Market Cap Surpasses ETH
According to the latest data from CoinMarketCap, XRP has officially exceeded Ethereum in terms of Fully Diluted Valuation (FDV). Specifically, XRP's FDV is $210 billion, while ETH's FDV is $196 billion.
FDV is an important indicator. It reflects the potential value of the total supply, including tokens not yet in circulation. This suggests that XRP is receiving a higher valuation when considering the maximum supply.
Investors John Squire and Edoardo Farina view XRP's FDV advantage as an early signal that market capitalization will soon overtake ETH.
"This means XRP has outperformed Ethereum for over 6 months. The transition has already begun!" Edoardo Farina predicted.
Investor DONNIE also believes that XRP's high FDV indicates a change in market perception. According to him, this reflects increasing investor acceptance. This sentiment seems to favor the narrative and predictions for XRP over ETH.
Capital Moving from ETH to XRP
Another key factor is the movement of investment capital between these two cryptocurrencies. According to TradingView data, ETH's dominance (ETH.D) has fallen to a new low, while XRP's dominance (XRP.D) has risen sharply in 2025.
The dominance index reflects how capital is distributed across the market. Since last November, ETH.D has dropped from 14% to 7%. Meanwhile, XRP.D has risen from 1.2% to 4.5%. This contrast shows that investors are prioritizing XRP over ETH.
This capital movement has also led to significant technical consequences. The XRP/ETH chart has broken through a downtrend line maintained since 2016, indicating a long-term upward trend for this pair.
This breakthrough means more than just a technical signal. It reflects a broader change in market sentiment. Investors are increasingly focusing on XRP.
A recent report from CoinShares supports this. The report states that digital asset investment product flows between ETH and XRP were contrasting last week. Ethereum recorded $26.7 million in outflows, while XRP attracted a strong $37.7 million in inflows.
This capital movement shows the potential for XRP to narrow the market capitalization gap with ETH.
Investor Sentiment Positive towards XRP
Lastly, investor sentiment is tilting towards XRP. Recent reports highlight increasing optimism for XRP, while ETH faces more skepticism.
According to a recent BeInCrypto report, XRP's price appears to be in a "predefined" growth stage, driven by financial institution support and XRP Ledger's development potential.
Recent news has created a positive atmosphere for XRP holders. Ripple acquired Hidden Road for $1.25 billion. Hashkey launched the first institutional XRP investment fund in Asia. Coinbase also introduced CFTC-regulated XRP futures.
In contrast, ETH is facing negative headlines and doubts. Reports like "Ethereum Dominance at 5-Year Low" and criticisms of ETH as a "centralized pre-mined coin" have worsened public perception.
Market sentiment is a key factor in price movements. Increasing support for XRP could help it surpass ETH in market capitalization.
