ALGO witnessed heightened selling pressure in the past few days. Funding rates fluctuated, and development activity improved after a sharp decline.
Algorand is a third-generation Blockchain project whose objective is to solve three fundamental problems of this technology, what many call “the trilemma” of Blockchains: scalability, decentralization, and security. Its native token is ALGO, and it aims to drive convergence between centralized and decentralized finance.
Algorand [ALGO] fell from $0.30 to $0.18 in the region, down 40% since early February. The bulls tried to seek entry into the market as they struggled to defend the $0.18 area. The bulls, however, could attempt a rally if Bitcoin [BTC] defends the $20K support and moves higher.
On lower time frame charts, BTC traded sideways in the $19.76K – $20.5K range. BTC price action could lead to ALGO consolidation in the short term, although underlying market conditions will largely dictate long-term price action during March.
What’s Next for ALGO – Reversal, Consolidation, or More Dump?
ALGO’s strong rally in early 2023 topped out at $0.2998, setting it up for a pullback. Nonetheless, the price bounced near the 50% Fibonacci level ($0.2301), allowing the bulls to inflict a rally. The selling pressure around $0.30, however, proved too much for the bulls to fend off.
ALGO saw increased selling pressure after breaking below the key value area (control line red dot) of $0.2558, keeping price action below the EMA tape.
So far, ALGO has fallen, oscillating between the EMA ribbon and the downtrend line (cyan line). At the time of writing, it was trading in the range of $0.1810 – $0.1933 on the 12-hour chart.
The bulls could attempt a rally if there is a convincing close above the 23.6% Fibonacci level ($0.1933). The continued recovery could face a barrier at the tape EMA ($0.2094). The next significant resistance lies between the 50% Fibonacci level ($0.2301) and the $0.26 range if the bulls close above the tape EMA.
Alternatively, the bears could sink ALGO to the January low of $0.17, especially if BTC falls below $20K and continues its downtrend.
The Relative Strength Index (RSI) made lower lows and was in the oversold zone, indicating increased selling pressure. But there was a rally, suggesting a decrease in selling pressure. Also, OBV decreased from February 8, limiting buying pressure in the same period.
Funding rates Fluctuated as Development Activity Recovered
ALGO funding rates fluctuated since early March, showing shaky demand, and tipping the balance in favor of the bears. Further fluctuation could give bears more leverage to devalue the token; therefore, investors should track it.
However, sentiment and development activity improved after sharp declines. It could offer a glimmer of hope for bulls as investor prospects for the token and networking improve.
By Audy Castaneda