Despite impressive on-chain metrics showing strong usage, Algorand’s ALGO is struggling to break through the $0.22 price barrier, raising questions among traders.
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Algorand processed over 1 million transactions in a single day, with Active Addresses surging nearly 30%, yet ALGO’s price fell by 0.45%.
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While top traders maintain long positions, retail investors continue to sell, keeping ALGO price stagnant below the crucial $0.22 mark.
Despite a rise in transaction volumes, ALGO’s price struggles, as retail selling counterbalances strong usage metrics and potential for growth.
ALGO’s new milestone and price action explained
Recent reports indicate a significant uptick in Algorand’s on-chain activity. Currently, the network boasts over 1 million executed transactions, and Active Addresses have climbed to 108,000. This marks an overall increase of nearly 30%.
According to Nansen, low transaction fees and increased usage have driven this recent milestone. Interestingly, this surge has coincided with a reaction off a critical support level. On the chart, ALGO has formed a triple-bottom line just above that support. A break above the descending resistance could potentially push the price toward $0.3128, representing a 47% upside.
However, despite the positive on-chain activity, weak market momentum indicates that ALGO could continue to experience price consolidation, leading to minimal gains or further losses.
Is momentum building up?
An analysis of both the spot and derivatives markets reveals that overall market momentum remains significantly low at this point. In the spot market, the Exchange Netflow—a crucial metric assessing long-term buying and selling activity—substantially confirms this downward trend.
Currently, traders in the spot market seem to be adopting a selling strategy rather than buying, with $74,000 worth of ALGO having been sold so far. At this critical moment, the altcoin is trading near a significant support level, and this selling activity does not enhance its bullish prospects, potentially keeping ALGO trapped in its current range.
In the derivatives market, the sentiment reflects a bullish inclination, yet the overall conviction appears to be faltering.
High selling, weak momentum — The implication
In derivatives trading, sentiment indicates a bullish trajectory, but the caution is palpable. A noticeable uptick in volume by 11.79% to $83.10 million contrasts with a 2.72% drop in Open Interest (OI) to $84.27 million. This discrepancy usually signifies a lack of confidence among traders.
Additionally, the Long/Short Ratio decreased to 0.9088, indicating that sellers dominate the market. Intriguingly, top traders on Binance remain heavily long, with account-level Long/Short Ratios exceeding 2.0. This creates a notable dissonance, suggesting that while institutional traders may anticipate a price increase, retail investors are still stepping back.
If selling pressure intensifies, ALGO may find itself lingering within the lower price regions until robust buying momentum surfaces.
Conclusion
In summary, while Algorand has achieved new operational milestones, its price remains under pressure from retail selling. Until buying momentum returns, ALGO risks further stagnation. The contrasting positions of institutional and retail traders indicate a critical juncture for ALGO’s recovery.
