XRP rebounds 8% after falling below $2
Will the rebound resume?
On December 10, the price of Ripple [XRP] briefly fell below $2, raising speculation that its sustained upward trend may have lost momentum.
However, a rapid rebound of 8% in the past 24 hours has reignited optimism.
On the surface, subdued indicators suggest that XRP's rebound has more room for growth, indicating that its bullish momentum may be far from over. Here are the factors that could drive XRP higher.
Dormant XRP tokens are on the move
XRP's average dollar investment age (MDIA) has sharply declined, indicating significant on-chain activity.
Historically, lower MDIA reflects the reactivation of previously dormant tokens, usually indicating a rekindling of investor confidence.
Conversely, a decline in MDIA indicates stagnation, as tokens held by long-term stakeholders remain untapped, limiting upward potential.
Currently, XRP's MDIA has dropped to its lowest level since early November.
This downward shift indicates that long-inactive tokens are re-entering circulation, enhancing liquidity and trading volume—both of which are key drivers of sustained price momentum.
The re-circulation of dormant assets typically aligns with bullish phases, as new trading activity indicates that both retail and larger stakeholders are taking advantage of price movements.
Combined with XRP's rapid price rebound, the decline in MDIA highlights an increase in market participation and strengthens the case for XRP's bullish outlook.
If this trend continues, XRP may maintain its upward trajectory.
Buyers regain control
In addition to on-chain activity, the buyer ratio in the XRP derivatives market further strengthens its bullish outlook. This metric measures the share of buy orders relative to total buyer transactions.
Whenever this ratio exceeds 0.5, it indicates an enhanced bullish dominance, as buyers outnumber sellers.
CryptoQuant's latest data shows that the buyer ratio has surged to 0.55, reflecting a sharp increase in buying pressure.
Historically, this trend aligns with periods of sustained price increases, as traders exhibit higher confidence in upward momentum.
While the current readings indicate a favorable environment, investors should keep a close watch on this.
A sustained buyer ratio above 0.5 could drive further increases, while a drop below this threshold may signal a weakening of optimism and prompt profit-taking.
XRP Price and Volume Analysis
On the 4-hour chart, XRP's price briefly dipped below the 20 and 50 EMA on December 12, suggesting a potential pullback. However, a quick recovery above these indicators restored bullish sentiment.
EMA now acts as dynamic support, with XRP consolidating around $2.40. Notably, the recent price stability accompanied by low trading volume suggests reduced selling pressure, favoring buyers in the short term.
If trading volume surges and the price continues to stabilize above the EMA, XRP may regain its bullish momentum and target $2.90.
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