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ALGO Activity Surges: Can Traders Capitalize on Algorand’s Rally?
Algorand’s price has dropped significantly, plunging over 20% in the past week. The sudden decline comes as a result of rising selling pressure and decreased profitability. Despite this downturn, active addresses have increased by a substantial margin, indicating a surge in ALGO activity.
A dramatic rise in new addresses and a significant spike in active users could signal a shift in market sentiment. On one hand, it may imply that traders are liquidating their holdings to cut losses or new investors are entering the market, fueling speculation and potentially triggering a rebound. However, if the price continues to decline in tandem with growing active addresses, it may reflect heightened selling pressure and worsen the bearish momentum.
The current profitability of ALGO’s DeFi ecosystem has dropped drastically, plummeting from 57% two weeks ago to an alarming 16%. This stark decline could be a signal that traders are scrambling to recoup their losses or mitigate their risks. The sharp drop in profitability further amplifies the negative market sentiment and potentially fuels additional selling pressure.
The technical analysis of ALGO’s four-hour chart suggests a growing imbalance between buying and selling pressures. As per our research, the Chaikin Money Flow (CMF) is now in the red zone, indicating that selling activity has surpassed purchasing activity, bolstering the bearish trend. Furthermore, the On-Balance Volume (OBV) is situated near its lower bounds, suggesting reduced trading volumes.
ALGO’s price chart reveals a descending parallel channel, implying that bears currently dominate the market. It appears that traders are increasingly skeptical of ALGO’s potential for recovery, instead opting to sell and lock in their gains or minimize losses.
Source: www.crypto-news-flash.com
