- DeFi and stablecoin usage on Algorand is falling.
- Staking outflows hit $55M despite high rewards.
- Bearish signals put ALGO near key support.
Algorand (ALGO) has been trading within a narrow range this week as the cryptocurrency market remains stagnant. The layer 1 blockchain token was trading at $0.1865 on Thursday, above its lowest point this year and $0.70 less than its apex last November.
However, any potential recovery in this market cycle seems threatened by mounting headwinds facing the project. The biggest is the sharp decrease in decentralised finance (DeFi) activity on the Algorand network. According to DeFi Llama, the total value locked on Algorand has fallen to $90 million, its lowest since 2022. This drop from a year to date high $183 million is a sign of investor nervousness. Millions of user funds have been spilled onto key decentralized applications (dApps) Tinyman, xBacked and AlgoRai Finance.
Algorand Stablecoin Volume Sees Modest Decline
The stablecoin segment has had better fortune, to no avail. Despite the slight decline, the total volume of stablecoins trading in Algo is now $135 million, down from $138 million in the middle of last month. Even though Algorand’s market cap is greater than $1.56 billion, these figures suggest that network usage is relatively underwhelming.
Notably, there is a trend in staking behaviour. Large numbers are beginning to exit the network for long-term stakes. According to data from StakingRewards, during the last 30 days, ALGO has seen $301 million stolen, worth around $55 million in net outflow. Even though Algorand’s staking reward rate of 7.58% surpasses some competitors, Algorand’s current staking market cap is $196 million.
Algorand Price Chart Signals Bearish Momentum
Even though Algo has scores of high-profile NFT partnerships, like a collaboration with FIFA, its market share in the space has shrunk. Over the past month, sales volume on the network saw a 10 percent fall to $776,966.
From a technical perspective, Algorand’s price chart remains showing bearish momentum. The token has been falling since reaching a high of $0.6130 in November. The $0.1463 has recently been set as a low and is now forming “death cross” — a bearish technical signal that the 50 day Exponential Moving Average (EMA) is below the 200 day EMA. Further downside pressure has also been indicated by the price dropping below the critical 78.6% Fibonacci retracement level. ALGO can break down if it falls below the current support at $0.1463 and start sliding lower towards $0.10.
