- ALGO’s active addresses increased from 104,000 to 190,000 in just 24 hours
- These addresses could be sold after a 20% drop in the altcoin’s price
Algorand’s (ALGO) price down more than 20% over the past seven days and trading at $0.371 at the time of writing. The prevailing bearish trend appears to be a reversal of the rally from earlier this month, which saw ALGO reach a multi-year high of $0.613.
However, amid this dip, the number of active addresses has increased, according to IntoTheBlock. These addresses have increased from 104,000 to 190,000 addresses in just 24 hours. At the same time, new addresses rose from 24,000 to 95,000.
Source: IntoTheBlock
The spike in active addresses could be a result of traders selling ALGO to minimize their losses during the dip. Consequently, the spike in new addresses could be that new traders are engaging in speculative activities.
If ALGO fails to recover from ongoing bearish trends as addresses continue to rise, it will indicate that selling activity has increased dramatically. This in turn will cause a volatile downtrend.
The profitability of active addresses is plummeting
Profitability of active ALGO addresses also fell significantly, reaching a one-month low after peaking earlier this month. At the time of writing, the profitability of these addresses stood at 16% – a notable drop from 57% just two weeks ago.
Source: IntoTheBlock
If these addresses become less profitable, it could increase selling pressure as traders try to minimize their losses. It could also indicate that the traders who bought during the rally are booking profits.
If profitability continues to decline, it could lead to negative and bearish sentiment that could push the price down.
Technical indicators show THIS
Technical indicators on Algorand’s four-hour chart showed selling activity on the rise. The Chaikin Money Flow (CMF) appeared to be hovering in negative territory, indicating that selling pressure has been higher than buying pressure.
On the other hand, the on-balance volume (OBV) indicator also hovered at a low, indicating that trading volumes have decreased.
(Source: Handelsview)
On the charts, ALGO appeared to be trading within a descending parallel channel, showing that bearish trends were prevailing. A drop below this channel’s lower trendline could trigger further declines, while a gain above resistance could fuel gains.
Declining DeFi activity could fuel the downtrend
According to DeFiLlamaAlgorand’s Total Value Locked (TVL) fell from $245 million to $165 million in three weeks. This decline coincided with increased sales activity that pushed the price lower on the charts.
(Source: DeFiLlama)
Traders should beware of a recovery in the DeFi TVL as it could precede a trend reversal. Conversely, if DeFi volumes and activity continue to decline, it could extend the downtrend.
Credit : ambcrypto.com
