Algorand [ALGO] has witnessed a significant uptrend in the past month, reaching a peak of $0.6133.
However, in the last 48 hours, the altcoin has experienced a drop, hitting a low of $0.459. Currently, Algorand is trading at $0.475, reflecting a 10.5% decrease in value over the past 24 hours.
Prior to this decline, ALGO had been on a positive trajectory, marking increases of 66.51% on weekly charts and 318.99% on monthly charts.
This recent surge is attributed to the expanding adoption and utilization of the Algorand network, as reported by IntoTheBlock.
Significant Spike in Active Algorand Addresses
According to IntoTheBlock’s analysis, the number of active addresses on the Algorand network has surged by 300% since the beginning of December.
This sharp rise in addresses indicates substantial growth in network activity, which plays a vital role in sustaining a positive price trend.
During this period, active addresses escalated from 123.57k to 427.23k. However, the current figure stands at 343.79k, showing a slight decline.
An increase in active addresses typically contributes to price appreciation, driving demand based on real network activity rather than speculation or trends.
Effect on Price Trends
The rise in Algorand’s network activity has directly impacted its price charts. Notably, the surge in active addresses coincided with a peak in prices.
Conversely, the recent drop in prices corresponds to a decrease in active addresses on the network.
Subsequently, analysis from CryptoCrypto suggests that Algo is undergoing a correction phase, with a bearish market sentiment prevailing over the last 48 hours.
For instance, major Algorand holders have been selling more than buying recently, resulting in a significant decline in netflow to -25.34 million Algo tokens, a three-month low.
A decrease in large transactions from 309 to 162 further signals reduced whale activity, indicating a wait-and-watch approach from significant players in the market.
The current prevalence of short positions among traders, as indicated by the Coinglass data, hints at a negative sentiment, with most investors betting on price declines.
Additionally, the negative DyDx exchange funding rate signals a preference for short positions over longs, reflecting a bearish outlook and reluctance to pay a premium for holding trades.
While Algo is showing bullish signs, the market sentiment is tilting towards bearish in the short term, suggesting a potential correction.
If selling pressure intensifies, Algo is likely to find support at $0.45, while a bullish resurgence could push prices to test resistance levels around $0.71.