- Algorand saw an outbreak over a month
- Lack of spot bidding after the breakout could be a sign of weakness among the bulls
Algorand [ALGO] managed to break out of its months-old dispersal formation. It followed in the footsteps of Bitcoin [BTC]which recorded a sharp dump to $99.7k on Monday. A few hours later, the price recovered to reach $108,000 before falling to $101.2k – all within 32 hours.
Source: ALGO/USDT on TradingView
BTC’s short-term volatility left ALGO hovering just above the range highs at $0.42. The OBV has not reached a new high and trading volume has increased only slightly over the past week. Can Algorand Investors Expect a Strong Rally After the Breakout?
Algorand’s TVL is accelerating, but is that enough?
At the time of writing, the Layer 1 chain had $164.55 million in Total Value Locked (TVL). The data showed that TVL more than doubled from the $70 million level in October 2024. This increase was accompanied by rising prices, which could have increased visibility and spurred participants into action.
However, over the past two years, the number of core developers has dropped from 39 to just 5. Sometimes that’s exactly how the cookie crumbles. A decline in innovation and reduced developmental activity can also negatively impact the ecosystem and community engagement, leading to reduced user activity.
A TVL comparison of ALGO and the industry leaders found that it held just 0.13% of the industry-wide TVL.
Algorand has never been one of the bigger players in DeFi and has failed to make gains in the sector in recent months. Meanwhile Solana [SOL] has gained some ground on Ethereum [ETH].
On the price action front, there were new limit buy orders at $0.42 and $0.39. These were the nearest support levels, with significant limit orders surrounding them.
The $0.37 and $0.33 levels further south were the next targets should Algorand fall below $0.39.
However, it seemed unlikely that this would happen. The three-day price chart outlined the strong support that the range highs at $0.42 were likely to serve. Moreover, the volatility over the past 24 hours has pushed liquidity around the high range.
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Finally, data from Coinalyse underlined the downward trend of both Open Interest and spot CVD over the past 24 hours. This lack of bidding in the spot and derivatives markets could be a concern for the bulls.
