ALGO Reaches Two-Year High as OI Soars

• Algorand just scored its two-year price high on Open Interest and the TVL boom.
• With the planned evolution of the ecosystem, ALGO’s growth might be very sustainable.

Algorand (ALGO) is on an impressive upward trajectory, breaking through key price milestones and flashing strong bullish indicators. The altcoin surged by over 15% on November 29, surpassing its previous year-to-date high of $0.33 in March. 

Algorand has rallied to a two-year high, with a 54% increase in the past week alone. With the price showing no signs of slowing down, Algorand’s on-chain data paints a promising picture for further growth. 

TVL and OI Reach New Heights, Ecosystem Update Boosts Rally

Strong on-chain metrics are behind the sustained Algorand’s meteoric rise. Specifically, the protocol has recorded a 26% increase in Total Value Locked (TVL) from $125.25 million to $157.97 million.

A rising TVL typically signals that more users engage with the blockchain by depositing or utilizing assets within ALGO-based protocols. As CNF mentioned earlier, there is a growth in Algorand’s monthly active users, making the TVL boom realistic.

At the same time, Algorand’s Open Interest (OI) is also showing signs of strength. Data from Coinglass reveals that OI for ALGO futures has increased from $75.69 million on November 26 to $95.87 million by November 29. 

The growth in OI suggests that additional capital is entering the market, supporting the bullish sentiment surrounding ALGO.

In addition to rising TVL and OI, the Annual Percentage Yield (APY) on ALGO investments has recently sparked significant interest. 

As expected, this increase in APY has led many investors to seek opportunities to capitalize on high returns. This growing interest has fueled the demand for ALGO and reflects bullish sentiment around the asset’s future.

Investors are also monitoring crucial ecosystem updates in the protocol’s planned evolution. As reported earlier by CNF, Algorand, and Cardano have a pending partnership in view. If this materializes, it might change the ALGO outlook, further driving growth.

Overbought Conditions and the Risk of a Correction

Despite the strong upward movement, there are signs that the market might be overheating. The Relative Strength Index (RSI) for ALGO on the weekly chart currently stands at 79. This is considered an overbought condition. 

When the RSI is in this territory, the asset might be due for a pullback. A dip below this overbought zone could lead to a short-term correction, especially if the outlook changes per the RSI. Investors are watching closely as the risk of a price pullback is now higher.

Although ALGO’s bullish outlook remains intact, key price levels must be closely monitored. If the weekly candlestick closes below $0.27, it could signal a price decline, potentially triggering a revisit to the previous low of $0.25.

Currently, the token is trading at $0.4419, up 20.81% in the last 24 hours, With ALGO staying above the key support level of $0.30, the next resistance levels to watch are $0.47 and $0.50. 

If it maintains this support, ALGO could target $0.50 and reach $1 long-term. This solely depends on continued positive sentiment and a breakout above $0.50. Investors are watching these critical levels closely to determine whether the rally is sustainable or to brace for a correction in the short term.