Avalanche’s (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 intray 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%.
AVAX/USD daily price chart. Source: TringView
Network growth offsets macroeconomic scare
Crypto markets have been whipsawed since the beginning of 2022 as investors assessed the United States 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%, respectively, from their November 2021 record highs. But they recovered almost half of their losses after bottoming out in late January 2022, thus prompting other crypto assets — including AVAX — to undergo similar healing rallies.
AVAX’s 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 dresses 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 leing Ethereum protocols, Aave and Curve into its ecosystem.
Avalanche 2021 total value locked versus competitors. Source: TringView
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 option in the quarterly sessions ahe. 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.
The report states:
“While Avalanche Rush may continue to serve as a catalyst for ecosystem growth and garner more project launches and partnerships, significant technological vancements 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 was met with sell-offs 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.
AVAX/USD daily price chart featuring falling channel. Source: TringView
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, which 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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META ARTICLE: Avalanche correction risk rises after AVAX price soars 80% from January lows PUBLISHED: 2022-02-08 11:17:11 SOURCE: https://cointelegraph.com/news/avalanche-correction-risk-rises-after-avax-price-soars-80-from-january-lows