Analyzing the Recent Surge in Algorand (ALGO) Prices
ALGO experienced a remarkable spike of over 33% to reach a 4-month high, accompanied by a significant surge in volume. However, various indicators suggest that sell pressure may be on the rise. Could profit-taking activities be capping the upside potential of this rally?
Algorand [ALGO] witnessed an impressive 33.68% surge within a 24-hour period, breaking out of its multi-month consolidation phase to hit a high of $0.31 before retracing to $0.2808.
This surge propelled the altcoin’s market capitalization to $2.5 billion, with its 24-hour trading volume soaring by 357.45% to $762.75 million.
Such a substantial increase in both volume and market cap indicates a significant influx of capital and heightened on-chain activity. However, questions linger regarding whether this surge is driven by speculative trading or if it marks the beginning of a larger trend.
Resurgence in Buyer Activity in Spot Markets
Following a brief lull, buyers re-entered the market with vigor. Data from Coinalyze shows that Algorand has seen two consecutive days of positive Buy Sell Delta.
Source: Coinalyze
At present, Algorand has recorded 111.39 million in Buy Volume compared to 110.6 million in Sell Volume. The previous day saw 181.84 million in Buy Volume against 168.61 million in Sell Volume.
These figures indicate a positive delta of 791.88K and 13.24 million, respectively, illustrating a strong demand for spot purchases.
Surge in Derivatives Activity
As the price of Algorand surged, investors also showed increased interest in strategic positions in the derivatives market.
Source: CoinGlass
Open Interest surged by 54.85% to $163.36 million, while Derivatives Volume spiked by 574.91% to $980.9 million.
The simultaneous increase in volume and open interest indicates growing participation in the futures market as traders establish strategic positions.
Increasing Profit-Taking Activities
Analysis of exchange netflow data reveals a rise in selling pressure.
Source: CoinGlass
On July 13th, Netflow reached +$3.14 million, indicating profit-taking activities. Subsequently, it dropped to +$480k, signaling a slower but consistent outflow.
A sustained positive netflow implies higher exchange deposits than withdrawals, suggesting that holders are liquidating their positions.
Assessing Market Momentum
Algorand’s recent surge has propelled its Relative Strength Index (RSI) to 83.18, entering overbought territory. Additionally, the Stochastic RSI spiked to 100, also indicating overbought conditions.
Source: TradingView
While these indicators suggest strong buyer dominance, they also hint at potential volatility ahead.
If buyers sustain their momentum, ALGO could target $0.34 as the next price level. However, continued selling pressure could lead to a retracement towards $0.25, a previous support level.
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