Algorand (ALGO) has experienced a substantial price drop of over 20% in the past week, falling to $0.371 from a recent high of $0.613. Despite this decline, there has been a notable increase in active addresses, suggesting a potential surge in trading activity. However, the profitability of active addresses has also decreased significantly, indicating that traders may be liquidating their holdings to secure profits or minimize losses.
The technical analysis of Algorand’s four-hour chart reveals rising selling pressure, with indicators such as the Chaikin Money Flow (CMF) and on-balance volume (OBV) pointing to a bearish trend. The cryptocurrency is currently trading within a descending parallel channel, raising concerns of further declines if the lower trendline is breached. Additionally, the Total Value Locked (TVL) in Algorand’s DeFi ecosystem has decreased from $245 million to $165 million in just three weeks, aligning with the overall bearish sentiment in the market.
The surge in active addresses could be attributed to traders participating in speculative trading or new entrants entering the market. If the price continues to decline alongside the increase in active addresses, it may indicate heightened selling pressure and worsen the ongoing downtrend. Traders and investors should closely monitor these factors as they could influence Algorand’s future price movements, with a potential recovery hinging on improvements in DeFi activity and profitability.
In conclusion, Algorand’s recent price drop and decrease in profitability have raised concerns among traders and investors. The surge in active addresses, paired with a decline in DeFi activity, adds to the bearish momentum in the market. Monitoring key indicators such as profitability, trading volumes, and DeFi activity will be crucial in assessing the future direction of ALGO’s price. Despite the current challenges, a potential recovery could be on the horizon if there is a shift in market sentiment and a rebound in DeFi activity.
