Algorand (ALGO) has been receiving a lot of attention lately and is showing bullish signals along with strong network activity, which is considered a sign of a potential price increase. With its DeFi reward mechanisms and innovative governance structure, ALGO has become a project that attracts attention for crypto investors and traders. According to analysis by COINOTAG, ALGO’s latest technical formations indicate the possibility of further upward movement in the coming weeks.
Double Bottom Formation Emerging for ALGO
Recently, a double bottom formation was observed on ALGO charts. This formation signals the beginning of a strong uptrend. This formation, defined by two consecutive troughs at the same price levels followed by a break above the neckline, is a widely used technical indicator in the trading world. This double bottom formation for ALGO occurred at $0.34 and formed a solid support point. ALGO then broke out of the downtrend, confirming the uptrend. This breakout led to a significant increase in buying interest.
According to market analysis, the key resistance levels ALGO is currently facing are $0.4799, $0.5421, and $0.5946. A successful breakout of these levels could trigger a sustainable uptrend. With the increase in global liquidity and the expansion of the ecosystem, the next price target could potentially reach $0.5946, but this is suggested to require increased trading volume.
Rising Active Addresses Indicate Strong Network Engagement
In recent weeks, Algorand has seen a noticeable increase in active addresses. This increase is parallel to the altcoin’s price recovery and suggests that it is regaining investor interest. Increased network engagement is considered a sign of increased confidence and potential bullish momentum. This increase also seems to be in line with the increase in global liquidity, as historically such increases reflect a surge in blockchain activity. An increase in active addresses can be a sign of sustained investor confidence, but any slowdown could signal profit-taking or hesitation.
MVRV Ratio Indicates Undervaluation
The MVRV (Market Value to Realized Value) ratio is currently at 0.45, indicating that ALGO is undervalued relative to its historical performance. A value below 1 typically indicates that market participants are holding ALGO at a loss, indicating accumulation zones ahead of price reversals. This MVRV value suggests that ALGO has the potential for an upside move. The current low valuation coincides with the breakout from the double bottom formation, providing a strong opportunity for an upside move. The low MVRV also suggests that selling pressure is limited and most investors are avoiding losses.
If the MVRV ratio rises to 1 or above in the coming weeks, it would indicate that the price of ALGO is approaching its realized value, and DeFi rewards and increased network activity would attract more investors and support the rally. However, if the MVRV ratio rises too quickly, it could signal overvaluation and profit-taking, so caution should be exercised.
All in all, ALGO’s low valuation, increasing network activity, and optimistic market sentiment make it an attractive option for traders looking for long-term upside potential.