What is the short-term outlook for ALGO after the sharp drop in prices?

After Bitcoin’s flash crash over the weekend, over $ 2.5 billion was liquidated, rocking the larger market. Accordingly, its total capitalization dropped to $ 2.2 trillion. As expected, large altcoins also fell amid a widespread market-wide sell-off. Altcoins like LUNA and ALGO, however, performed relatively well and surprised the market.

Like the market as a whole, ALGO is not entirely immune to the decline of Bitcoin. In particular, it lost nearly 25% of its value in just one day. Even so, the rapid recovery that followed was impressive.

In fact, the coin stayed at number 19 by market capitalization, well above the important $ 1.6 mark, which has served as a long-term support since September with enthusiastic interest from the organization, partnerships and partnerships.

Also, with ALGO trading near the lower support line, the crucial question remains when will the price break out and what will it take?

Algorand’s Ethereum Killer Status Improvement?

Over the past year, Algorand has rapidly emerged as a competitor in the smart contract platform space as the market focus seems to be shifting to a multi-chain approach. In fact, the platform’s extensive partner network reinforces the mighty Ethereum killer story.

Just recently, Borderless Capital announced the launch of a $ 500 million ALGO fund to develop projects built on top of this blockchain, including those that “disrupt the NFT and initiative creation economy. Something that could raise capital in Algorand’s DeFi ecosystem through deleveraging, lending, borrowing, and productive farming. ”

In particular, in September of this year, the platform launched a DeFi fund worth $ 300 million. In addition, in early April 2020, Algorand announced an investment of 250 million ALGO to promote decentralized application creation. All of this has strengthened the image of the platform in the DeFi area.

On December 2, Algorand’s Total Value Locked (TVL) hit $ 100 million. Additionally, as of press time, TVL is up 6.19% in the last 24 hours, although the larger market is still in decline and TVL DeFi is significantly lower.

Source: DefiLama

What helped keep the price down?

ALGO fell below the critical support at $ 1.50. After that, however, the HODLer’s “buy dip” appeared in the long bearish wick on the daily chart. This support from retailers helped keep prices down.

Longer term support from HODLer (a division whose volume has grown significantly in recent months) could be key to opening the door for ALGO’s Bull Run in the near future.

The source: IntoTheBlock

In particular, ALGO’s volatility has increased recently and could be a good sign. The previous ALGO rallies were also accompanied by higher volatility, as shown in the figure below.

Source: IntoTheBlock

At the time of going to press, the open interest and funding rates have fallen sharply. However, on December 4, over $ 2.7 million in long positions were liquidated. This could result in a short term correction as price action looks bearish in the lower timeframe.

The source: Coinlyze

However, the bulls driving price above the simple moving averages could get the coin back on track. The growth of Algorand in the DeFi area, NFTs and the Ethereum killer saga also contribute to further upward development in the long term.

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