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Key Insights:
- Avalanche price could be ready to surge by 50% this year.
- The token formed a double-bottom pattern on the daily chart.
- The rally will ignore the upcoming AVAX token unlock.
Avalanche price jumped to a crucial resistance level this week. Crossing above that resistance level will point to more gains, potentially 50% from the current level as its decentralized finance (DeFi) growth continues. This growth will offset the impact of the upcoming AVAX token unlocks.
Avalanche Price Chart Signals a 50% Surge is Possible
AVAX price has jumped by almost 60% from its lowest point in June as the altcoin season continued. This rally happened after the Avalanche price flashed the popular double-bottom pattern, often leading to more gains.
Avalanche has moved to the double-bottom neckline at $26.76, its highest level in May this year. Measuring the distance from the neckline to the double-bottom at $15 shows that it is about 44%.
Extrapolating the same distance from the neckline at $26 points to an eventual jump to $38.7, up by over 53% from the current level. This target is close to the 61.8% Fibonacci Retracement level at $40.
AVAX price has other technical catalysts that may push it higher in the longer term. Its Average Directional Index (ADX) has jumped t 32, its highest level since March 2 of this year. Similarly, the Relative Strength Index (RSI) shows the momentum continues.
The risk, however, is if the price fails to move above the neckline at $26.7. If this happens, it may drop back to $15.73, its lowest level in June this year.
AVAX Token Braces for a Token Unlock
A potential risk facing Avalanche is an upcoming token unlock that will increase the circulating supply. The network will unlock tokens worth over $42 million on Thursday. These tokens account for about 0.4% of the float.
Avalanche has already unlocked 59.4% of all the tokens; the remaining ones are yet to be released. The last unlock will happen in 2037. Token unlocks are normally bearish as they increase the supply.
Ecosystem Growth to Offset the Token Unlock
On the positive side, there are signs that the network growth will help to offset the impact of its token unlock. First, Avalanche is one of the chains that the state of Wyoming is trialing for the establishment of the first state stablecoin, WYST. If selected, it could be a major validation of its technology.
Second, FIFA selected it for its non-fungible token initiatives, replacing Algorand, another popular layer-1 blockchain.
More data shows that the Avalanche network is gaining steam. For example, its stablecoin supply has remained in an uptrend this year, and now has over $1.5 billion in assets. This is notable because analysts anticipate that the stablecoin sector could become a trillion-dollar industry.
Nansen data shows that Avalanche is one of the most active chains in the crypto industry. Its transaction jumped by over 156% in the last 30 days to 37.8 million. Similarly, the number of active addresses jumped by 79% to 1.48 million.
Meanwhile, Avalanche has become one of the top players in the decentralized exchange (DEX) industry. It handled over $4.3 billion this month, higher than last month’s $3.9 billion. The top DEX networks in the ecosystem are Blackhole, Pharaoh Exchange, and Uniswap.
Summary
Avalanche price has staged a strong recovery in the past few weeks, fueled by the ongoing crypto market bull run. This growth could accelerate after the token formed a double-bottom pattern.
It is about to form a golden cross pattern, while top oscillators like the Relative Strength Index (RSI) and MACD have moved upwards. Therefore, the AVAX price may continue doing well as the upcoming token unlock has already been priced in by market participants.
Disclaimer
This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.
