With the SEC dropping its four-year lawsuit against Ripple, industry experts are examining whether Ripple (CRYPTO: XRP) could overtake Ethereum (CRYPTO: ETH) in market capitalization, a feat that would require overcoming significant market and structural challenges.

What Happened: The legal resolution, confirmed by Ripple CEO Brad Garlinghouse, has already driven XRP's price to $2.53, a 13% increase, according to data from CoinMarketCap, reflecting renewed investor confidence.

However, analysts remain cautious about XRP's ability to surpass Ethereum, which currently holds a circulating market cap of $246 billion compared to XRP's $146 billion, per CoinMarketCap data.

Garlinghouse on Wednesday announced the end of the legal battle, which began in December 2020, stating, "The case is over," and framing it as a "victory" against the SEC's aggressive stance, which he said cost XRP investors $15 billion.

The lawsuit, filed under former SEC Chairman Gary Gensler, alleged that XRP was an unregistered security, a claim rejected by a federal judge in 2023, who ruled that XRP does not meet the legal definition of a security.

This decision, upheld through the SEC's recent withdrawal, has broader implications for the crypto industry, as it aligns XRP's regulatory status with Ethereum, which the SEC classified as a commodity in 2018.

Garlinghouse criticized the SEC's approach, saying, "The SEC wasn't seeking justice--they were seeking to win a case at any cost," and noted that the ruling sets a precedent for future crypto regulations.

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What Experts Are Saying: Sid Powell, CEO of Maple Finance, a decentralized finance platform managing $700 million in assets, views the SEC's decision as a positive development for XRP.

"The SEC win is positive for the price of XRP and signals a more cooperative and pro-innovation regulatory environment for crypto in the U.S.," Powell told Benzinga.

He added that while institutional investors may have already factored in the news, retail traders could push XRP higher in the short term.

Powell highlighted that XRP's fully diluted valuation has surpassed Ethereum's, but flipping its circulating market cap would be challenging due to Ethereum's $114 billion total value locked (TVL) in DeFi, despite recent concerns about TVL shifting to other Layer-1 blockchains.

Ryan Lee, Chief Analyst at Bitget Research, emphasized the broader impact of the ruling, stating that it "represents a turning point not only for Ripple but for the broader crypto industry."

He pointed to potential growth drivers for XRP, such as increased adoption of Ripple's On-Demand Liquidity (ODL) service by financial firms and a more favorable U.S. regulatory stance, which could attract further investment.

Lee noted that XRP briefly overtook Ethereum in market cap in 2018, but cautioned that Ethereum's strong fundamentals make a sustained flip unlikely without explosive adoption of XRP.

Ripple's 2024 annual report noted that ODL processed $30 billion in transaction volume last year, with partnerships including Standard Chartered Bank and MoneyGram.

Lee also recalled that XRP briefly surpassed Ethereum in market cap in January 2018, when XRP hit $3.84, but stressed that Ethereum's fundamentals, including its role in hosting 60% of DeFi's total TVL, make a sustained flip challenging without a dramatic increase in XRP adoption.

Adding to the sentiment, IOST Co-CEO Blake Jeong highlighted that the case's resolution signals "a potential softening of regulatory pressure on the industry."

However, he noted that Ethereum also saw gains following the announcement and suggested that "XRP flipping Ethereum is still a long way off."

Slava Demchuk, CEO of AMLBot, warned that despite the positive momentum, "it takes more than a legal victory to flip ETH. ETH has a strong ecosystem, total TVL is over $114b + the gap between the capitalizations of ETH and XRP is $100b, for XRP to increase so much its capitalization needs much more than just a legal victory.”

He said the price of XRP may rise to $3 – $3.5, no more and that since the market is in a correction and the Fear and Greed index is at 20, it will not allow XRP to rise more than $3.5.

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