After a sustained decline to a low of $0.105, ALGO finally found support and reversed. The altcoin held support at $0.11 and climbed to $0.118, reversing the short-term and 100-day moving averages.
In fact, at the time of writing, Algorand was trading at $0.116, up 10.36% on the daily charts. During the same period, the altcoin’s trading volume jumped 101% to $62 million, signaling increased participation in the market.
Speculative demand triggers Algorand trend reversal.
After Algorand (ALGO) reported a rebound from a $0.10 drop, speculators returned to the market and continued the rally.
According to Coinglass data, derivatives volume increased 21% to $89.5 million, while open interest jumped 5% to $56.2 million.
The simultaneous increase in the volume of investment transactions and derivatives indicates increased participation and constant capital inflows. In fact, Algorand Futures inflows increased to $24.18 million, compared to $21.83 million in outflows.
Meanwhile, the altcoin’s Long Short ratio on Binance and OKX remained above 1, while the overall ratio was $0.94.
The ratio suggests that traders on Binance and OKX were optimistic and took long positions, anticipating further gains. However, the market continues to see increased demand for short positions.
This lag suggests that investors have mixed sentiment, while some expect prices to rise, others see further decline.
Profit-taking is soaring, threatening the rally.
As expected, as Algorand recovered from its recent slide, traders who had bought at lower prices rushed to cash out. According to Coinglass, exchange deposits reached $5.27 million while withdrawals dropped to $4.25 million.
Because of this, Spot Netfow rose 854% to $1.02 million, suggesting that exchanges saw more sellers than buyers. Often, such market behavior precedes stronger bearish pressure, leading to lower prices.
Can ALGO’s Bullish Momentum Sustain?
Algorand rose significantly as speculative demand dominated the market, reinforcing the bullish momentum.
As a result, the altcoin’s Relative Strength Index (RSI) made a bullish crossover and rose to 60. When the RSI reaches these levels, it suggests that buyers have taken control of the market.
Traditionally, sustained demand precedes stronger bullish momentum, resulting in larger gains. Given current market conditions, ALGO is currently testing the 200 EMA at $0.12.
If the momentum maintains, the altcoin will manage to reverse $0.12 and consider another move towards $0.13. However, profit takers are also very active and could derail any gains.
Increased pressure from the group could see the altcoin fall below $0.11 again, towards $0.105.
Final summary
- Algorand (ALGO) rose 10%, reversing the 100-day EMA, and surged to $0.118.
- ALGO has seen a trend reversal driven by increased speculation, but increased profit-taking threatens further slippage.
