Algorand price prediction as ALGO Demand Wanes

Algorand (ALGO/USD) price drifted downwards on Tuesday morning as investors focused on regulatory concerns. ALGO’s token dropped to $0.2200, which was a few points below Monday’s high of $0.2372. It has lagged the performance of other cryptocurrencies in the past few days.

Is ALGO a financial security?

Algorand price has moved sideways in the past few days even as other cryptocurrencies have bounced back. There are two main reasons for this. First, Algorand has seen little traction in the past few weeks as investors focus on other chains. 

Activities in its DeFi and NFT industry has been a bit limited recently. Data by DeFi Llama shows that the total value locked in its ecosystem stands at A631 million, lower than its all-time high of over A800 million. Meanwhile, data by CryptoSlam shows that it has a minimal market share in the NFT industry.

Second, Algorand has faced significant competition in the past few months. Like I wrote in this article on Avalanche, these layer 1 networks are seeing strong competition from layer 2 platforms like Optimism and Arbitrum.

The other Algorand news is that the Securities and Exchange Commission labeled it as financial security during the ongoing Bittrex litigation. In addition to Algorand, the other tokens it mentioned are OMG Networks, DASH, and Real Estate Protocol.

Algorand price prediction

ALGO chart by TradingView

ALGO price has underperformed most cryptocurrencies this year. It has jumped by just 33% from the lowest point this year. In contrast, coins like Litecoin, Ethereum, and Bitcoin have all surged by more than 60% this year. This performance is mostly because of the overall weak demand for both ALGO coins and the Algorand ecosystem.

On the daily chart, the ALGO price has been in a consolidation pattern in the past few days even as Bitcoin surged to the highest point since June. It is hovering at the 25-day and 50-day moving averages while the price has moved above the ascending trendline.

The price is also substantially below the important resistance point at $0.2998, the highest level in January. Therefore, I suspect that the coin will continue underperforming in the coming days. If this happens, Algorand price will likely have a bearish breakout as sellers target the ascending trendline shown in red.