- ALGO’s recent performances have grabbed many eyeballs lately
- Analysis of Active Addresses revealed increasing network activity – A sign of growing interest among traders
Algorand (ALGO) is in the news these days among cryptocurrency traders after it demonstrated strong signs of bullish potential on the charts. Thanks to its innovative governance structure, DeFi reward systems, and strengthening technical indicators, the blockchain has now positioned itself as a key player in the market.
A double bottom pattern!
Recently, ALGO formed a double bottom pattern on the charts, with the same signifying a strong bullish reversal. This pattern, marked by two consecutive troughs at a similar price level, followed by a breakout above the neckline, is a widely recognized technical indicator.
Source: TradingView
In the case of ALGO, the double bottom occurred at the $0.34 price level, forming a robust base of support. Following this, ALGO broke through the descending trendline, confirming its bullish breakout. The breakout was accompanied by a notable hike in price momentum, indicating growing buying interest among traders.
Based on the analysis, the immediate resistance levels for ALGO are now $0.4799, $0.5421, and $0.5946. Breaking these levels could pave the way for sustained upward momentum.
In light of rising global liquidity and Algorand’s growing ecosystem, the next price target could be $0.5946, contingent on sufficient volume and the broader market’s support.
Active addresses and network engagement
In another case, over the last few weeks, Algorand registered a notable hike in active addresses, with the uptick in line with the altcoin’s price recovery on the charts.
Source: IntoTheBlock
This hike underlined renewed interest from both traders and investors, signaling higher network demand. Active addresses are typically an early indicator of bullish momentum as they suggest growing confidence in the asset.
This hike also corresponded with the uptick in global liquidity, which has historically driven higher blockchain activity. If active addresses continue trending upwards, it would indicate sustained investor confidence.
However, a slowdown could suggest hesitation or profit-taking among participants. Thus, traders should monitor this metric closely as it often precedes significant price movements on the charts.
MVRV (Market Value to Realized Value)
With a reading of 0.45, the MVRV Ratio indicated that ALGO is undervalued, relative to its historical price performance.
An MVRV below 1 means that market participants are, on average, holding ALGO at a loss. This has historically been a zone where accumulation and price reversals occur.
Source: TradingView
The aforementioned reading seemed to reinforce the notion that ALGO has significant room for upward movement. In fact, this undervaluation aligned with the recent breakout from the double bottom pattern – A sign of a strong opportunity for bullish continuation.
The low MVRV also pointed to minimal risk of excessive selling pressure. Especially as most holders are unlikely to take losses at this stage.
If the MVRV ratio starts approaching 1 or higher in the coming weeks, it could indicate that ALGO’s price is catching up to its realized value. This trend would support a growing bullish sentiment, especially as DeFi rewards and increasing network activity attract more participants.
However, it is advisable to be cautious if MVRV rises too rapidly as it could signal potential overextension and profit-taking.
This undervalued state of ALGO, combined with rising activity and improving sentiment, makes it an attractive option for traders seeking long-term upside potential.
