XRP is showing strong potential to surpass Ethereum (ETH) in market capitalization and become the second-largest altcoin by 2025. Several factors are supporting this projection, including XRP's Fully Diluted Valuation (FDV) outperforming ETH, a shift of capital from ETH to XRP, and a positive investor sentiment towards XRP.

Latest CoinMarketCap data reveals that XRP's FDV has officially exceeded Ethereum's, with XRP valued at $210 billion compared to ETH's $196 billion. This indicates that XRP is considered more valuable in terms of total token supply, even those not in circulation yet.

Investors like John Squire and Edoardo Farina view XRP's lead in FDV as a promising indicator that it may soon overtake ETH in market cap. According to them, this trend has been ongoing for over six months and signals a shift in market perception towards XRP over ETH.

Capital is also moving from ETH to XRP, as shown by TradingView data indicating a decline in ETH dominance and a rise in XRP dominance since 2025. This shift in capital distribution signifies that investors are favoring XRP over ETH.

Moreover, investor sentiment is increasingly positive towards XRP, with reports highlighting optimism surrounding XRP's growth potential, backed by support from financial institutions and recent developments in the XRP Ledger. In contrast, ETH is facing skepticism and negative headlines, which may hamper its market appeal.

Overall, the combination of XRP's higher FDV, capital movement, and investor sentiment favoring XRP over ETH suggests that XRP is on track to narrow the gap in market capitalization with ETH.