Avalanche (AVAX) recovery extended into its third week, primarily in the wake of similar upside retracement across the top crypto assets.
On Thursday, AVAX’s price rallied by nearly 16% to reach $96.50, its best level since Jan. 14, 2022. The massive intraday move came as a part of a recovery that started Jan. 22, after the Avalanche token bottomed out near $53. As a result, AVAX’s net rebound came out to be more than 80%.
Network growth offsets macroeconomic scare
Crypto markets have been whipsawed since the beginning of 2022 as investors assessed the U.S. Federal Reserve’s monetary tightening prospects. After reaching its record high above $150 in November 2021, AVAX lost as much as 65% of its value in what many have termed as “crypto winter.”
Similarly, top cryptocurrencies Bitcoin (BTC) and Ether (ETH) plunged by as much as 52% and 57% from their Nov. 2021 record highs. But they recovered almost half of their losses after bottoming out in late Jan. 2022, thus prompting other crypto assets — including AVAX — to undergo similar healing rallies.
AVAX price also rose as Avalanche—as a standalone blockchain project—reported massive network growth at 2021’s close.
That included a rise in the number of its daily active addresses to 70,000 per day in Q4 versus 10,000 per day in Q3 and a 714% rise in the total value locked (TVL), the fastest growth among its competitors within the Layer-1 and Layer-2 categories, after the arrival of leading Ethereum protocols, Aave and Curve, into its ecosystem.
Interestingly, the Avalanche network grew in Q4 despite a drop in its net market valuation in the same period, suggesting AVAX merely reacted to turbulence in the crypto and, in turn, the global markets, led by the Fed’s so-called taper tantrums.
But a report co-authored by Messari researchers Chase Devens and James Trautman hinted at higher AVAX adoption in the quarterly sessions ahead. It mentioned Avalanche Rush, a $180 million liquidity mining incentive program launched in August 2021, for its ability to attract more participants into the network.
Excerpts from the report:
“While Avalanche Rush may continue to serve as a catalyst for ecosystem growth and garner more project launches and partnerships, significant technological advancements are on the horizon for the teams developing the Avalanche core platform and are critical to the network’s ability to sustain further growth.”
AVAX technical outlook
AVAX’s recent upside move met with selloff near a multi-month descending trendline resistance this Tuesday.
Specifically, the resistance comes as a part of a falling channel. AVAX has been trending lower inside it since the beginning of its massive correction move in late November 2021. As a result, the Avalanche token’s probability of continuing downward inside the channel’s range—for now—appears higher.
An extended pullback upon testing the channel’s upper trendline as resistance may push AVAX toward the interim support level of $86.50. A further breakdown would have AVAX/USD eyeing $72 as its next target.
Related: VanEck launches its first multi-token cryptocurrency fund
Nevertheless, on the whole, AVAX’s bearish target on a pullback looks to be near the channel’s lower trendline —that is around $57.
Conversely, a decisive move above the channel’s upper trendline could have AVAX eye $104 as its next upside target, with an inclination to hit $135 on a further move upward.
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Sourced From: cointelegraph.com/news/avalanche-correction-risk-rises-after-avax-price-soars-80-from-january-lows
Published Date: Tue, 08 Feb 2022 11:17:11 +0000