The cryptocurrency market has always been volatile, but recent signals suggest that NEAR Protocol might be heading into a particularly challenging phase. After enjoying a brief rally that delivered a 17% gain last week, NEAR’s upward momentum appears to have fizzled out. Over the past 24 hours, the token registered only a slight uptick of 0.18%, hinting at growing uncertainty among traders.

Adding to this concern is a notable decline in user activity on the Near Protocol network. Data from Artemis reveals that the number of active addresses has dropped sharply, from 4.2 million on January 1 to just 3.2 million at present. This drop in engagement could spell trouble for the token, as reduced activity often correlates with declining investor interest.

Market Signals Indicate Potential Price Drop

One of the key reasons for concern is that NEAR has entered what analysts call a “supply zone.” This zone, which lies between $6.154 and $6.311, is a critical area where significant sell orders are clustered. When an asset trades into such a zone, it often faces strong downward pressure, making it harder for prices to rise.

Using technical analysis tools like Fibonacci retracement, experts predict that if sell pressure intensifies, NEAR’s price could fall as low as $4.80. However, the asset could find temporary support at several levels on its way down, including $5.712, $5.551, $5.390, and $5.161.

Technical Indicators Signal Bearish Momentum

A closer look at NEAR’s technical indicators paints a bearish picture.

1. Average Directional Index (ADX):The ADX, which measures the strength of a trend, is currently at 42.19. This reading indicates a strong bearish trend. A rising ADX typically signals that the current trend—downward in this case—is likely to continue.
2. Death Cross Formation:A bearish “death cross” has formed on the Moving Average Convergence Divergence (MACD) chart. This pattern occurs when the signal line (orange) crosses above the MACD line (blue). At the moment, the signal line is at 0.135, while the MACD line is at 0.128. The appearance of red histogram bars further confirms the bearish trend.

Declining Engagement Fuels Concerns

The drop in active addresses is another red flag for NEAR. When fewer users interact with a blockchain network, it often signals declining interest and engagement. This reduction in activity can lead to lower demand for the token, putting additional downward pressure on its price.

Since January 1, NEAR’s active addresses have decreased by a significant 1 million, highlighting a sharp decline in user participation. This lack of engagement could deter potential investors and exacerbate the token’s challenges in maintaining its value.

What Could Be Next for NEAR?

Despite the bearish outlook, there are still potential opportunities for recovery. If NEAR can find support at key levels like $5.161, it might stabilize before attempting to regain upward momentum. Additionally, a surge in user activity or renewed interest in the protocol’s ecosystem could help reverse the current trend.

For now, however, NEAR holders should proceed with caution. The combination of technical indicators, declining engagement, and the challenging supply zone suggests that the token’s price could continue to face downward pressure in the near term.

Conclusion

NEAR Protocol is at a critical juncture. While last week’s rally brought hope to investors, the current market signals indicate a possible reversal. With active addresses dropping and bearish patterns forming on the charts, the token could face further losses, potentially dropping to $4.80.

Traders and investors should monitor the market closely and keep an eye on key support levels and engagement metrics to make informed decisions. Whether NEAR can bounce back or continues its slide remains to be seen, but the coming days will be crucial for the token’s trajectory.