Tron’s native cryptocurrency, TRX, has enjoyed a strong bullish run throughout 2024, making impressive gains in the process. However, recent analysis points to a possible pullback, as indicators suggest that the cryptocurrency may be reaching a local top.

One key metric contributing to this sentiment is the 180-day Sharpe ratio, which tracks risk-adjusted returns and has historically been effective in identifying market tops. According to CryptoQuant’s analysis, the Sharpe ratio for TRX has recently surged into a high-risk territory, signaling the potential for a correction in the near future.

TRX’s Bullish Momentum and Recent Price Action

TRX has experienced notable growth in 2024, with a 120% increase in its price year-to-date. The cryptocurrency recently reached an all-time high (ATH) of $0.224 on November 23, 2024. Since then, however, its price has pulled back slightly, trading at $0.20 at press time—about 10% below its recent peak. This decline is noteworthy but not necessarily indicative of a strong sell-off, as market activity remains mixed.

Despite the recent drop, TRX’s price is still well above its earlier 2024 levels, suggesting that some investors may have taken profits while others remain optimistic about its future potential. This leaves the market in a cautious but still somewhat bullish state, albeit with increasing downside risk.

Whale and Institutional Activity Declines

The analysis also reveals a slowdown in whale and institutional activity. On-chain data shows that large holder inflows peaked at 2.13 billion TRX on November 16, but large holder outflows were slightly higher at 2.16 billion TRX on the same day. These figures suggest that while whales were active, their movements weren’t particularly bullish.

Since then, large holder inflows have dropped significantly to just 205.77 million TRX by November 27. Outflows also decreased to 159.87 million TRX on the same day, reflecting a net positive demand from whales. However, the overall decline in whale activity suggests a reduction in demand from this investor class, which could signal a cooling of bullish momentum.

Spot and Derivatives Market Insights

In the spot market, TRX has seen higher outflows than inflows since mid-November, indicating some selling pressure. While there was a brief $5.27 million in positive flows on Wednesday, the overall trend shows a decrease in net demand.

On the derivatives side, open interest for TRX peaked at $160.25 million on November 24, but this was still lower than the August peak. This suggests that the enthusiasm in the derivatives market has waned somewhat, further reinforcing the notion that TRX may be nearing a local top.

What’s Next for TRX?

The current analysis suggests that while TRX is still experiencing a strong year, the combination of the high Sharpe ratio, declining whale activity, and mixed market signals points to the possibility of a correction. The token’s price may continue to face downward pressure in the short term, especially if demand from whales and institutional investors continues to diminish.

However, this doesn’t necessarily mean the end of TRX’s bullish trend. If it can hold above the $0.20 level and regain some momentum, there could still be room for growth. The key for investors will be monitoring the Sharpe ratio and overall market sentiment, as these factors could provide valuable insights into TRX’s future price action.