- Algo is down 10.5% in the last 24 hours.
- Algorand’s active addresses soared 300%.
Over the past month, Algorand (ALGO) has been in a massive uptrend, reaching a high of $0.6133.
However, over the past 48 hours, the altcoin fell to a low of $0.459. In fact, at the time of writing, Algorand was trading at $0.475. This represents a drop of 10.5% in the last 24 hours.
Prior to this drop, ALGO was on an upward trajectory, rising 66.51% on the weekly charts and 318.99% on the monthly charts.
This increase over the past month is attributed to the growing adoption and usage of the network according to IntoTheBlock.
Algo’s active address flies away
In its analysis, IntoTheBlock observed that Algorand’s active addresses increased by 300% since December 1st.
Source: In the block
According to them, this increase in addresses suggests considerable growth in network activity, essential for a sustainable rally.
So, during this period, active addresses increased from 123.57k to 427.23k. However, at press time, this saw a moderate decline to 343.79k.
Often, an increase in the number of active addresses is key to price increases, and when the network grows, this helps facilitate price increases through demand and not speculation or trends.
Impact on price charts?
As expected, Algorand’s network activity had a considerable impact on Algo’s price charts. For example, when active addresses jumped 300%, prices recently peaked.
Therefore, a drop observed over the past day is directly correlated with a drop in active addresses.
Therefore, AMBCrypto analysis indicates that Algo is experiencing a market correction on all charts. So, over the last 48 hours, the market has turned bearish with sellers dominating the market.
Source: In the block
For example, large Algorand holders have sold more than they bought over the past few days. As such, net holder flow declined to a three-month low of -25.34 million Algo tokens.
When large holders sell more, it shows their lack of confidence in the direction of the market.
Source: In the block
Additionally, the number of large Algorand transactions also decreased, from 309 to 162. This shows that whale activity has decreased with fewer purchases or sales related to large holders.
When whales take a back seat in the market, it shows that they are still waiting for the right time to rent.
Source: Coinglass
Likewise, most traders are currently taking short positions. According to Coinglass data, the long/short ratio shows that most investors are short. This implies that they are betting on falling prices.
Source: Santiment
Finally, Algo’s DyDx foreign exchange funding rate turned negative. This implies that the demand for short positions is higher than for long positions. So, most traders are bearish and are not willing to pay a premium to maintain their trades.
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Simply put, although Algo is currently in a bullish phase, the bears are trying to take control of the market. As such, sentiment is moving towards a bearish trend, at least in the short term. This suggests a possible correction.
Therefore, if sellers enter the market, Algo will find support around $0.45. Subsequently, if the bulls regain momentum and take over the market, the next significant resistance is around $0.71.
