Is XRP seriously undervalued? Stellar activity explodes 10 times, market cap gap sparks arbitrage craze

Stellar blockchain activity experienced explosive growth in early December. Stellar and XRP share similar cross-border payment use cases, with increasing institutional investor interest. Ripple, behind XRP, has obtained regulatory licenses in jurisdictions including Dubai, Singapore, and the United States, allowing it to provide cross-border remittance services. Technically, if XRP breaks above $2.20, it could signal the start of the next upward cycle.

Leading Indicator Significance of Stellar On-Chain Activity Surge

(Source: Artemis)

The explosive growth of Stellar activity has attracted new attention to the cross-border payments sector, potentially laying the foundation for a price increase in XRP. This indicator tracks total payments on the Stellar blockchain, which aims to simplify cross-border transactions using its native XLM token and stablecoins like USDC. According to Artemis data, Stellar’s activity surged in early December, indicating broader real-world application.

The similarity between Stellar and XRP makes the surge in Stellar activity a significant leading indicator. Both focus on cross-border payments and institutional services, employ fast and low-cost settlement mechanisms, and are deeply integrated with stablecoins. When Stellar’s on-chain activity explodes, it generally suggests rising demand for cross-border payments, which should theoretically also be reflected in XRP.

This “canary in the coal mine” effect is common in crypto markets. Stellar’s market cap is about one-tenth of XRP’s, making it more sensitive to demand changes and quicker to react in price and activity. When Stellar leads the way, it often foreshadows larger-cap assets in the same sector following suit. Historically, during the 2021 bull market, Stellar and XRP frequently exhibited such correlated movements.

XRP directly competes with Stellar in this field; their missions are nearly identical, though XRP’s market cap is much larger. This market cap gap raises key questions: if both have similar use cases and Stellar’s activity is surging, why is XRP’s market cap ten times larger, yet its on-chain activity does not show comparable strength? This mismatch may imply XRP is overvalued, or more likely, that XRP’s potential remains underexploited.

From another perspective, the surge in Stellar activity could be a prelude to an XRP breakout. As actual payment demand increases, enterprises and financial institutions will seek the most mature, liquid, and regulated solutions. XRP outperforms Stellar in these aspects, so demand transmission may be delayed but will eventually be reflected in XRP adoption and price.

Strategic Significance of Ripple’s Global Regulatory Breakthroughs

Ripple, the company behind XRP, has made significant progress in global expansion through obtaining key regulatory licenses in Dubai, Singapore, and the US. These licenses allow Ripple to offer compliant remittance services to companies seeking to utilize blockchain infrastructure for international fund transfers. This regulatory breakthrough is Ripple’s biggest competitive advantage over Stellar.

The VARA license in Dubai enables Ripple to operate in the Middle East, a region with substantial cross-border payment needs and a friendly regulatory environment. The MAS principal payment institution license allows Ripple to operate in Asia’s financial hub, directly serving financial institutions across Southeast and East Asia. The multi-state money transfer licenses in the US give Ripple a legal foothold in the world’s largest economy.

Three Core Differences Between Ripple and Stellar

Regulatory License Depth: Ripple has obtained multiple licenses in Dubai, Singapore, and the US; Stellar has fewer

Institutional Client Scale: Ripple has over 300 institutional partners; Stellar mainly serves small and medium-sized entities

Market Cap and Liquidity: XRP’s market cap is about $140 billion, ten times that of Stellar, providing deeper liquidity pools

These differences make Ripple more trusted by large banks and multinationals. When a bank considers adopting blockchain payment solutions, regulatory compliance is paramount. Ripple’s multiple licenses demonstrate that its services have passed rigorous scrutiny, greatly reducing partnership risks. In contrast, Stellar, while technically excellent, still lags in regulatory coverage and institutional recognition.

Ripple claims to have over 300 institutional partners, though most use RippleNet’s messaging layer rather than settling value directly on-chain. This asymmetric adoption presents a challenge for XRP. Converting these message users into on-chain settlement participants requires operational redesign, but the surge in Stellar activity hints that such conversion may be accelerating.

Technical Breakthrough at $2.20 Significance

(Source: Trading View)

In the past 24 hours, XRP fell 2.4%, but after the Federal Reserve’s highly anticipated rate decision yesterday, XRP remained above the critical $2 level. The 4-hour chart shows XRP trading within a range over the past days, oscillating between $2 and $2.20.

A decisive break above the $2.20 upper boundary could mean XRP is preparing to reach new highs before year-end. From a technical perspective, the $2–$2.20 zone is a typical consolidation pattern; such sideways movement often occurs before trend continuation. Breaking the upper boundary would confirm bullish control, attracting trend followers.

Breaking $2.20 also has another significance. This level is near a previous local high and a zone of accumulated profit-taking. Surpassing this resistance indicates that buying pressure is strong enough to absorb profit-taking. Clearing this hurdle would open the path toward the next resistance zone at $2.50–$2.70.

The positive on-chain indicators for Stellar may be a “canary in the coal mine,” signaling impending altcoin breakout. In the era of miners, miners would take canaries underground because they are more sensitive to toxic gases than humans. Anomalies in the canary’s health serve as a warning. In crypto markets, small-cap assets with similar applications often reflect trend changes first. Stellar’s surge might be an early sign that the cross-border payment sector is about to explode.

Given Stellar and XRP’s similar use cases and increasing institutional interest, XRP may soon break out of its range and resume upward momentum. The current consolidation between $2 and $2.20 may be waiting for a catalyst. Continued growth in Stellar activity, expanding Ripple regulatory licenses, and favorable US policies such as the potential inclusion of 401( could all serve as triggers for a breakout.

) Institutional Adoption Gap and Valuation Reassessment

The valuation gap between XRP and Stellar reflects not just market cap differences but also the depth and breadth of institutional adoption. Ripple’s over 300 institutional partners, though many still use the messaging layer, form a huge moat. When these institutions eventually decide to move settlement on-chain, Ripple will have a strong advantage, having already established relationships.

However, the surge in Stellar activity hints at another possibility: adoption by small and medium-sized institutions and emerging markets may be faster than expected. Stellar is positioned more towards inclusive finance, serving remittance companies, emerging market banks, and individual users. Their total transaction volumes may rival large institutions, and they often adopt new tech more quickly.

If Stellar can dominate small and medium institutions and emerging markets while XRP focuses on large banks and developed markets, the two could complement rather than compete directly. This scenario suggests Stellar’s activity surge does not threaten XRP but instead indicates that the overall cross-border blockchain payment market demand is growing rapidly—beneficial for both.

From a valuation standpoint, XRP’s current price is about $2, with a market cap of around $140 billion. If policies like 401### are implemented, releasing hundreds of billions of dollars in demand, coupled with Ripple’s regulatory breakthroughs and increased institutional adoption, XRP could return to its historical high of $3–$4. Stellar’s activity surge provides fundamental support for this outlook, demonstrating that actual cross-border payment demand is exploding, not just speculation.