Ripple’s native cryptocurrency, XRP, has once again captured the attention of the crypto market after its recent 8% rebound. The cryptocurrency briefly dipped below the $2 mark on December 10th, leading some to speculate that its bullish trend might be losing steam. However, the rapid recovery in the following 24 hours, coupled with several under-the-radar market signals, has reignited optimism among investors.

Dormant XRP Tokens Reactivate, Boosting Market Confidence

One of the key indicators behind XRP’s recent price action is a surge in on-chain activity, specifically the reactivation of dormant XRP tokens. The Mean Dollar Invested Age (MDIA) metric, which tracks the average age of XRP holdings, has seen a sharp decline. A lower MDIA indicates that long-dormant tokens are being reactivated, signaling renewed interest from investors.

Historically, when a cryptocurrency sees an uptick in token activity from previously inactive wallets, it can be a bullish sign, suggesting that both retail and institutional investors are returning to the market. A sudden influx of tokens from long-term holders typically fuels higher liquidity and trading volumes, which can drive prices upwards.

In XRP’s case, the recent decline in MDIA to its lowest point since early November is a promising development. This trend indicates that more XRP tokens are being moved and traded, which could provide the fuel for continued upward momentum. The shift suggests that investor confidence is growing, particularly as the market sees both fresh buyers and larger players taking positions in XRP.

Rising Bullish Sentiment in the Derivatives Market

In addition to the on-chain activity, XRP’s derivatives market has shown signs of increasing bullish sentiment. One of the key indicators in this space is the taker buy ratio, which measures the proportion of buy orders to total taker trades. A higher taker buy ratio indicates that buyers are dominating the market, signaling a stronger bullish trend.

Recent data from CryptoQuant has shown that the taker buy ratio for XRP has risen to 0.55, signaling that the buying pressure is outpacing the selling. Historically, such movements align with periods of sustained price growth, as increased buying pressure often leads to higher prices. The continued dominance of buyers in the market suggests that XRP’s bullish trend could continue, provided the buying momentum holds.

However, traders should remain cautious. A drop in the taker buy ratio below 0.5 could signal a shift in sentiment, leading to profit-taking and potential price corrections. Therefore, the direction of the market will depend on whether the buying dominance can be sustained in the short term.

Price and Volume Analysis: What’s Next for XRP?

Looking at the technical side, XRP’s price recently tested and bounced off the 20-day and 50-day exponential moving averages (EMAs). These EMAs act as dynamic support levels, and XRP’s swift recovery above them after briefly dipping below suggests that the price is still in a bullish trend.

Currently, XRP is consolidating around the $2.40 level, with the 50-day EMA providing solid support. Notably, the low trading volume accompanying this consolidation suggests that selling pressure is relatively subdued. If volume picks up and supports further price stability above the EMAs, XRP could be on track to target the $2.90 mark.

However, if volume fails to build or decreases, XRP risks slipping into a period of sideways movement or even a potential retest of the $2.30 support level. The price action in the coming days will be crucial in determining whether the current rally can be sustained or if XRP will face another pullback.

What’s Next for XRP?

As it stands, XRP’s recent 8% rebound and the underlying bullish indicators suggest that the cryptocurrency could be on the verge of a larger rally. The combination of reactivated dormant tokens, rising on-chain activity, and bullish momentum in the derivatives market paints a positive picture for XRP’s short-term outlook.

However, market participants should closely monitor key factors such as trading volume and the behavior of the taker buy ratio in the derivatives market. If these indicators continue to signal a strong buying environment, XRP could target even higher levels, with the next resistance levels likely to be around $2.90 or even $3.50. On the other hand, a decline in market participation could lead to a price correction, potentially bringing the price back to support zones around $2.30.