Algorand rallied to a multi-year high after the network emerged as a possible choice for central bank digital currencies and the team revealed its DeFi plans.
In the past few months cryptocurrencies have become a frequent topic of discussion among the mainstream media and traditional investors partially because of the Bitcoin evangelism of well-known influencers like Elon Musk, Mark Cuban and Michael Saylor.
One platform that has benefited from increased attention on the cryptocurrency sector is Algorand (ALGO), a scalable, secure, and decentralized digital currency platform.
Since the start of 2021, ALGO price has steadily grown from $0.33 on Jan. 1 to $1.84 on Feb.12, its highest level since July 2019. Its trading volume also increased from $70 million to $1.1 billion during that same period.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for ALGO on late Feb. 9 (E.T) which preceded a short dip and was followed by a more dramatic price rise.
As shown on the ALGO/USDT chart above, ALGO price pulled back to retest the $0.84 support after a high volume surge pushed the price from $0.77 to $0.95. Once the retest of the underlying support was confirmed ALGO price resumed its uptrend and rallied to a new 2021 high at $1.84 on Feb.12.
At 10 p.m. on Feb.10 the VORTECS™ score reached a peak at 74 and this coincided with ALGO price rising from $1.08 to its current 2021 high at $1.84.
The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
Three reasons for the surging interest in Algorand are its capacity as a platform for stablecoins as they become increasingly integrated into traditional financial channels, its expansion into DeFi through partnerships and DApp creation, and the ability to earn a yield by simply holding tokens in a network wallet.
Stablecoin use increases
Stablecoins became a widely discussed topic among regulators and traditional finance after Facebook revealed its Libra project in 2019.
In early January 2020, the U.S. Treasury’s Office of the Comptroller of the Currency announced that national banks would be allowed to run independent nodes for distributed ledger networks and conduct transactions with various stablecoins that operate on these networks.
Algorand had previously been chosen by Circle as one of the platforms to host its USDC stablecoin and the Marshall Islands also chose the network for its national digital currency.
The protocol’s pure proof-of-stake consensus mechanism allows all wallets to participate in validating blocks, helping to increase network security and transactions per second capabilities.
Recently, high gas fees on Ethereum have left stablecoin issuers and DeFi traders looking for viable alternatives and Algorand is quickly emerging as a prime candidate. Likewise, central banks from around the world have begun analyzing which blockchain network to integrate their digital currencies (CBDC) with and Algorand has made it on the shortlist of viable contenders.
Algorand enters DeFi
Decentralized finance has quickly become one of the main driving forces behind the continued growth of the cryptocurrency sector, and Algorand stands poised to take full advantage of its development.
Several recent high-profile partnerships point to Algorand’s growing aspirations within the DeFi and fintech space.
Instimatch Global, a digital platform for institutional short-term money market trading, partnered with Algorand in early January and now a large portion of the millions of dollars in transactions it conducts each quarter will pass through the Algorand network.
Other notable partners include Frontier, a chain-agnostic DeFi aggregation layer which received a grant from the Algorand Foundation to grow the Algo DeFi ecosystem, and Opulous, the “first-ever decentralized finance (DeFi) offering backed by music as an asset class.”
Cryptocurrency asset security platform Curv has also joined forces with Algorand and will integrate the network within its asset-agnostic technology infrastructure, while Algorand will benefit from Curv’s custody solutions.
ALGO staking creates buy pressure
Another reason for Algorand’s continued growth comes down to the simplicity of staking on the network. ALGO holders can easily stake their tokens on the network and earn 7.19% by simply holding the tokens in the Algorand Wallet.
Only 1 ALGO is needed to begin earning and currently 2.33 billion ALGO, or 59.5% of the circulating supply, are staked on the network.
As blockchain technology and cryptocurrencies continue to gain widespread acceptance and adoption, networks capable of handling increased transaction loads will be needed to efficiently onboard new users into the crypto ecosystem.
Algorand’s rapidly expanding DeFi infrastructure, a growing list of partnerships and the possibility of it being chosen to support CBDCs show the project has strong fundamentals.
Furthermore, the ability to easily earn a 7% yield while also helping to maintain the network’s security could attract new investors and lead to an uptick in buy pressure for ALGO.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.