This not an quantitative analysis (determine the reasonable price range), but focus on the logic of why XRP is overvalued
Please note that the value and the price are two different things, they can deviate from each other a lot. Thus, even though XRP is overvalued, it not means the price of XRP will decrease soon (the price movement cannot be precisely predicted).
Currently, XRP is No.3 coin ranked by market cap (except the stable coin), and is 2.5x of No.4 coin's (BCH) market cap, which does not make sense to me.
For the analysis of BCH (also focus on the logic), please refer this article: Why am I turned bullish on BCH
What is XRP
If you follow the crypto market in 2017, you must heard the name of XRP, which is a superstar crypto with over 300x gains during that year. The XRP is a crypto created by ripple company, and ripple company aims to disturb the current SWIFT system used in the cross-border transaction area: it created a system that can largely reduce the transaction fees and increase the transaction speed, compared with SWIFT.
Ripple has an impressive customer (financial giants) and investor (famous VCs) list, and ripple claims that the XRP is the only universal currency in the system. With the growth of ripple, XRP would widely applied and even become the universal currency of the world, sounds great, right?
No.
Why XRP is overvalued
XRP is not a 'traditional crypto', it is centralised
Unlike other cryptos, all XRP were pre-mined by ripple company, which gradually sell XRP on market. Of course, ripple had airdrop lots of XRP to early users and institutions, but that's just a marketing method.
Besides the amount of XRP, there are other features can show how centralised is XRP. For instance, ripple network has many gateways (act like banks), which can frozen funds (not only XRP, but other assets such as dollars) lay on the gateways. Of course, if you store your XRP in a personal wallet, no one can frozen it.
XRP is not the core product of ripple company, and is not necessary in its core product
When you enter the ripple website, you can see lots of giant partners of ripple, and those partners are using ripple's core product - xCurrent, which do not need XRP at all. Even though ripple has remove the three products (xCurrent, xRapid, Xvia) introduction from website last year and says all product would use rippleNet, but most clients (especially financial giants) still not using XRP. So why does ripple do that? does it want to make XRP necessary in the rippleNet in the future? or just do marketing for XRP?
XRP will not widely applied in the cross-border transaction area in the future.
Blockchain technology is valuable in the cross-border transaction area, but that not means XRP is necessary or even suitable in this process: the high volatility prevent XRP to be integrated into this process. The most important part is that ripple's network already achieve the goal without using XRP (xCurrent), given banks can already improve the cross-border transaction process by using xCurrent, why would they take high FX risk to use XRP as an agent in this process?
The ripple company only treat XRP as a source of revenue (through selling)
Some people may think that ripple trying its best to advance the application of XRP usable so that XRP and ripple company are on the same boat. That's not true from my opinion. Indeed, ripple company works hard to 'integrate' XRP into this process (cross-border transactions), but why? take a look of ripple company's revenue then you would have an answer: until now, most of ripple's revenue (if not all of) comes from selling XRP (they are transparent about this), and this situation will last at least for several years. So yes, the price of XRP is important to ripple company, because they keep selling XRP (monthly base) into the market and want to sell at a good price.
If the price of XRP is so important to ripple, does that means ripple will truly integrate XRP into its main business and focusing on the long term benefit of XRP? Not really. When ripple sold most of its XRP, the price of XRP would be irrelevant with the revenue of ripple company, do you think ripple would still keep XRP in its main business at that time (if they really make XRP necessary in the process, which is very unlikely)? of course not.
Remember, ripple company could simply launch a new product similar to xRapid, let's call it 'xFast', and issue another cryptos which integrate with the new product. Because XRP is not necessary in its main business, this is not difficult to ripple company.
Why XRP could still be No.3 coin (except the stable coin)
Mostly because of consensus. The market positioning XRP as the No.1 cross-border transaction coin that can reshape the traditional financial industry.
The only use case for XRP is cross-border transactions, or as payment method (widely speaking), and the advantages of XRP are nothing else but transaction speed and fees.
Let's think about what is the essential factor that change an asset's price. Yes, it is the need & supply (bid & ask), in other word, an asset could have extremely high valuation even if it is worthless, as long as people think it worth that value.
The future of XRP
XRP is not a good investment from the logic side, because ripple's main business is to improve cross-border transaction process, which do not need XRP at all. Actually, blockchain technology did bring revolutions to the cross-border transactions area, but banks definitely don't want to use XRP as an agent in the process given its high volatility (that's why all giant banks only use xCurrent). Thus, XRP is irrelevant to the ripple's main business, in other words, XRP (almost) does not actual share the increased value of ripple company.
XRP could used in the process (although not necessary) as liquidity, and the use of XRP in this process become the only reason for XRP to climb. But think it this way:
if XRP is optional in the rippleNet in the future, there will not enough demand for XRP to rise.
if XRP become necessary in the rippleNet in the future, XRP must act like stable coin, and thus meaningless for investment (but have actual usage).
So what's the best case for XRP to rise? Yes, if ripple company keep saying (of course, do marketing) that XRP is increasingly important in rippleNet but do not make it necessary in the process, until it sold most of its XRP.
Even without all the problems mentioned above, XRP still facing intense competitions. Competitors include but not limited:
cryptos: there are many cryptos that also have advantages in cross-border transactions or payments area, such as BCH, Stellar, Dash...
giant companies: actually those giant companies that interest in improving SWIFT system are more powerful competitors of ripple, such as JP Morgan (JP Morgan coin), Facebook (Libra)...
From my perspective, the ranking of XRP will gradually decrease and eventually out of top 10 coins, maybe in 3 - 5 years.
Note that XRP's price may still increase a lot in the next bull market (but who wouldn't?), but I would suggest you to be careful of XRP's risk (volatility).
As a VC, I will invest in good startups that have cutting-edge technologies and strong teams, but I will never invest in nonessential products of those startup.
Ripple is a good company, and XRP is its nonessential product.
hmmmm...