Is TRX at a local top? What the Sharpe ratio tells about its future

Cryptoquant analysis of the Sharpe ratio suggests that TRX top is in.
Evaluating whether the cryptocurrency is headed for a cliff.

As a seasoned analyst with over two decades of experience in the financial markets, I find the recent analysis on Tron (TRX) intriguing. The surge in TRX’s Sharpe ratio to high-risk levels, coupled with declining whale and institutional activity, suggests that we might be approaching a top. However, it’s important to remember that every market has its own unique dynamics, and cryptocurrencies are no exception.

This year in 2024, Tron’s own digital currency TRX has been consistently pushing forward with robust bullish energy, leading to substantial profits. But recent evaluations indicate that the digital currency could potentially face a significant decline soon.

Based on a recent analysis by CryptoQuant, it appears that TRX investors might experience bearish trends in the near future. This prediction is derived from the cryptocurrency’s 180-day Sharpe ratio, which has a proven track record of predicting market tops with a high level of accuracy.

Based on CryptoQuant’s evaluation, the Sharpe ratio has spiked to a point suggesting elevated risk. However, they also indicated that the price might continue climbing, yet levels beyond the present range may involve increased potential for downward movement.

TRX has consistently risen and increased by approximately 120% in value this year. Notably, it reached a new all-time high (ATH) of $0.224 on November 23rd. However, since then, there has been some selling activity which slowed down the upward trend. Currently, TRX is being traded at around $0.20 as reported at the time of press.

source: TradingView

At the moment, TRX has decreased about 10% from its most recent high point to its current price. However, this drop doesn’t automatically mean there’s been a strong surge in selling activity.

Evaluating TRX sell pressure

Information from blockchain data indicates a decrease in whale and institutional activity. For instance, there was a peak inflow of approximately 2.13 billion TRX by large holders on November 16th. Conversely, outflows from these large holders slightly exceeded this figure, reaching around 2.16 billion TRX on the same day.

Since November 27th, large-scale inflows have decreased to approximately 205.77 million, while large-scale outflows also fell to 159.87 million. This indicates that there has been a net increase in demand from ‘whale’ investors on this day.

Additionally, the figures emphasize a decrease in demand not only from whales but also from the institutional sector as well.

It was observed from the analysis that the outgoing transactions (outflows) of the TRX cryptocurrency exceeded incoming transactions (inflows) significantly starting mid-November.

It’s worth mentioning that the cryptocurrency received inflows totaling approximately $5.27 million on Wednesday. Regarding derivatives, the highest open interest was recorded at $160.25 million on November 24th. This was notably lower compared to its peak in August.

This month’s modest open interest indicates a relatively low demand for TRX derivatives. Compared to peak open interest periods, particularly during the preceding bull market, the demand seems significantly lower.

Read TRON’s [TRX] Price Prediction 2024-25

In simpler terms, the minimal trading activity among large investors (whales) and their decreasing interest, could imply a potential period of Tron (TRX) selling. Yet, it’s worth noting that Tron has generally shown resilience against significant selling pressure in the short term, suggesting there might be room for further price increases.

This could continue playing out, facilitating more upside in the coming months.

2024-11-29 10:15

Evaluating TRX sell pressure

Read More