MIT professor Silvio Micali launched Algorand to the mainnet back in 2019. Since then its price has traded similarly to most altcoins, rising drastically in 2020-2021 pandemic trades and crashing with the rest of the market in 2022.
Despite the overall bearish pressure on the crypto market, traders are still riding choppy volatility with shorter-term trades. To do so, many use on-chain trading signals, which give traders a better understanding of forces moving these coins.
Below are some of the most useful on-chain Algorand trading signals, provided by IntoTheblock.
Algorand On-Chain Trading Signals Analysis
Holders Making Money at Current Prices
The holders making money at current prices Algorand trading signal shows the holders that are currently up on their investment. It compares the current price to each wallet’s average cost of purchase. The vast majority of holders are in the red because of macro pressures on crypto markets and broader equity markets. While investors being down is typically a bearish indicator, it is important to look at other indicators as well.
Concentration by Large Holders
The concentration by large holders trading signal tracks the centralization of holdings. Typically, you want to see decentralized holding or many holders. Decentralization ties into the overall ethos of crypto. The main criticism among many tokens and coins is that only a few wallets hold a majority of their supplies, meaning they are centralized. Over-centralization can lead to a few people taking over the network. Also, if just a handful of holders control the majority of the equity, they can sell at any time, hurting retail investors.
Price Correlation With Bitcoin
The price correlation with Bitcoin trading signal tracks the relationship between Algorand and Bitcoin price movement. Outside of stablecoins and some meme coins, almost every altcoin is strongly correlated to the price movement of Bitcoin. Algorand is no different. However, Bitcoin is more stable than most altcoins. When bearish economic conditions are at present, Bitcoin will likely hold up better than most altcoins. ALGO is down more than Bitcoin as reflected in its correlation indicator.
Holder’s Composition by Time Held
The holder’s composition by time held displays the average hold length of Algorand. It is split into three categories, 1 year+, 1-12 months, and under 1 month. Understanding how long traders are holding an asset can be important. If you are looking to make a longer-term investment, it is best to see a high concentration of holders in the 1 year+ category.
Transactions Greater Than $100,000
The transactions greater than $100,000 trading signal tracks the total amount in transactions that are over $100,000. It can be used as a way to track whales trading the token.
This transaction demographics trading signal describes what part of the world trades are coming from, which can indicate global sentiment.
Exchange Inflows and Outflows
The exchange inflows and outflows is one of the most important Algorand trading signals. It shows tokens leaving versus entering exchange wallets. Centralized exchanges are one of the only ways to sell cryptos for fiat currency (USD, EUR, GBP). When investors send their cryptos into an exchange, they are probably getting ready to sell them. When they withdraw them to a personal wallet from an exchange, this is an indicator that they want to hold them for the long term. The data measures these flows over the past week, which can be one of the most important trading signals to understand the sentiment of traders holding ALGO.
Is Now a Good Time to Buy Algorand?
It is a difficult time to be purchasing altcoins. With interest rates rising, there is less liquidity in the market. Speculative investments like cryptocurrencies are some of the first to crash since they often do not provide cash flow or are backed by tangible assets. However, if Algorand survives this bear market, you might look back at this moment where the price was beaten down and wish you had more conviction.
How to Buy Algorand?
Algorand is available for purchase on a number of fantastic trading platforms including Binance.US and Crypto.com. You could also purchase it through a decentralized exchange if you have a non-custodial wallet. One great decentralized exchange to check out is Uniswap.
How Does Algorand Fit Into the Bigger Picture?
Algorand is a Layer 1 blockchain technology. It will need to display that it has unique values that developers and users enjoy or be seamlessly bridgeable to Ethereum. If Algorand can provide value and survive the current bear market, it could be a big winner at today's cheap prices.
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