The Near Protocol (NEAR) is currently facing a troubling trend as the number of active addresses has significantly declined, signaling potential turmoil ahead for investors. After experiencing a rally that saw NEAR rise 17.12% over the past week, the momentum is waning, with the cryptocurrency merely inching up by 0.18% in the last 24 hours.

This raised the alarm among market observers as NEAR enters a precarious supply zone, which could lead to further price declines. Recent data highlights a concerning drop in interest, with active addresses dwindling from an impressive 4.2 million at the start of January to just 3.2 million now, according to data from Artemis. This drastic reduction indicates that fewer investors are engaging with the token, typically foreshadowing a bearish trend.

Is a Price Drop Imminent?

Analyzing current conditions, it becomes evident that NEAR might soon reverse its minimal gains, potentially signaling a price drop. The asset has found itself trapped in a critical supply zone, specifically between $6.154 and $6.311. In trading terms, a supply zone indicates where significant sell orders are concentrated; hence, when prices rise to this level, selling pressure could push NEAR lower.

The Fibonacci retracement tool used in the analysis indicates that if this selling pressure continues to build, NEAR's price could plummet as low as $4.870. However, there are potential support levels that could provide temporary relief for investors at prices of $5.712, $5.551, $5.390, and $5.161.

Technical Indicators Signal Bearish Sentiment

Further examination using the Average Directional Index (ADX) reveals a strengthening bearish outlook for NEAR holders. The ADX readings have spiked to 42.19, indicating a solid downward trend. Traditionally, a rising ADX means the market is gaining momentum, and in this case, it aligns with the emergence of a "death cross." This pattern occurs when the signal line crosses above the MACD line, suggesting further price declines are on the horizon.

Currently, the signal line stands at 0.135, while the MACD line is at 0.128. The death cross not only indicates possible price decline but is often accompanied by the formation of red histogram bars on related charts, reaffirming negative market sentiment.

The Big Question: Should Investors Panic?

As NEAR teeters on the edge of potential declines, many investors are left wondering: should they hold the line or cut their losses? This ongoing bearish sentiment suggests that NEAR could potentially drop to unsettling levels, creating panic among current holders. The unfolding situation will be crucial to watch for anyone invested in Near Protocol, and analysts recommend staying alert for any significant shifts in market dynamics or trading volumes.

The crypto landscape can be unpredictable, making it essential for investors to stay informed and prepared for sudden changes. How will NEAR navigate these turbulent waters? Only time will tell, but the coming days will be pivotal.