Here’s why Algorand price could rise as its key data deteriorate

The Algorand price has crawled back in the past few days, mirroring the performance of other altcoins. ALGO token was trading at $0.213 on Wednesday, a few points above this month’s low of $0.1480. It remains 92% below its all-time high. This article explains why Algorand may rebound soon even as its fundamentals weaken.

Algorand has become a fallen angel and a ghost chain

Third-party data indicate that Algorand has become a ghost chain, as the number of developers and users on the network has declined over the past few years.

DeFi Llama data indicate that Algorand’s market share in the decentralized finance (DeFi) industry has been declining recently. 

The network has a total value locked (TVL) of over $109 million, a significant decline from its all-time high of over $395 million. While most chains have lost their TVL in the past few years, Algorand’s performance means that other newer chains like Base, Sonic, and Berachain have overtaken the network. 

The top players in the Algorand ecosystem are Lofty, Folks Finance, Reti Finance, and Vesta Equity.

More data shows that the DEX network in Algorand has little going on as the volume has continued moving downwards. DEX protocols in the network handled about $1.48 million in volume in the last 24 hours. In contrast, top chains like Ethereum, Solana, and Base handled billions in this period.

The stablecoin market cap in Algorand is also much smaller than that of other chains. It has risen to $140 million, up from its low of $132 million this week. 

Furthermore, Algorand has continued to liquidate its staking assets over the past few months. It has lost over 301 million ALGO tokens, or approximately $65 million, in the past 30 days. Its staking market cap has moved to $227 million, while the staking ratio has dropped to 12.5%.

Read more: IOTA’s Rebased upgrade to go live on May 5: can IOTA price soar 120%?

ALGO price technical analysis

The weekly chart shows that the price of Algorand has been in a strong downtrend in the past few months. It bottomed at $0.097, where it failed to move below several times since 2023. It has formed a double-bottom pattern whose neckline is at $0.6135. This pattern is a popular bullish sign.

If this pattern works out, Algorand price will likely rise and retest the neckline at $0.6135, which is about 190% above the current level. A drop below the double-bottom level of $0.09 will invalidate the bullish outlook.

Algorand price daily chart analysis

The daily chart indicates that the ALGO price has rebounded slightly over the past few days. This rebound happened after the coin completed the formation of the falling wedge chart pattern. A wedge is made up of two descending and converging lines that connect higher highs and lower lows. 

The widest part of the wedge pattern is about 60%. Therefore, measuring the same distance from the breakout point brings the next target level at $0.2880. 

Additionally, the Polkadot price has moved above the key resistance level at $0.1987, its highest swing point on May 28, and the upper side of the cup and handle pattern. Oscillators such as the Relative Strength Index (RSI) and Stochastics have all pointed upward. 

The bottom line

Algorand’s fundamentals have deteriorated in the past few years, as it has lost market share in the cryptocurrency market. It has a small share in the decentralized finance and non-fungible tokens (NFT) industries. 

However, it has formed some encouraging technical patterns that may indicate further gains later this year. Historically, a cryptocurrency can surge even as its fundamentals worsen. 

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