ALGO’s Active Addresses Surge Amid Price Decline

Active addresses have risen from 104,000 to 190,000 in just 24 hours
These addresses could be selling following a 20% decline in the altcoin’s price

Algorand’s (ALGO) price dropped by more than 20% in the last seven days to trade at $0.371, as of press time. The prevailing bearish trend seems to be a reversal from the rally earlier this month, which saw ALGO reach a multi-year high of $0.613.

Amid this dip, the number of active addresses has risen, according to IntoTheBlock. These addresses surged from 104,000 to 190,000 in just 24 hours. At the same time, new addresses rose from 24,000 to 95,000.

The spike in active addresses could be due to traders selling ALGO to minimize losses during the dip. Consequently, the increase in new addresses may indicate new traders engaging in speculative activities.

If ALGO fails to recover from ongoing bearish trends while addresses continue to rise, it will indicate increased selling activity, potentially fueling a volatile downtrend.

Active Address Profitability Plummets

The profitability of active ALGO addresses dropped significantly, hitting a one-month low after reaching a peak earlier this month. At the time of writing, profitability stood at 16%—a notable decline from 57% just two weeks ago.

If profitability continues to decrease, selling pressure may increase as traders seek to minimize losses. It may also suggest that traders who bought during the rally are booking profits, leading to negative sentiment that could push prices lower.

Technical Indicators Show THIS

Technical indicators on Algorand’s four-hour chart reveal rising selling activity. The Chaikin Money Flow (CMF) oscillates in the negative region, suggesting higher selling pressure than buying pressure.

Conversely, the on-balance volume (OBV) is oscillating at range lows, indicating declining trading volumes. Currently, ALGO trades within a descending parallel channel, indicating prevailing bearish trends. A drop below the lower trendline could ignite further dips, whereas a gain above the resistance level could fuel price increases.

Declining DeFi Activity Could Fuel Downtrend

According to DeFiLlama, Algorand’s Total Value Locked (TVL) has declined from $245M to $165M over three weeks. This decline coincides with increasing selling activity that pushed the price lower on the charts.

Traders should monitor recovery in DeFi TVL, as that could precede a trend reversal. Conversely, if DeFi volumes and activity continue to decline, it could extend the downtrend.