The Impressive Rally of AVAX Boosts Profitability for Half of Its Holders
During the middle of the week, Avalanche [AVAX] showcased remarkable performance in the cryptocurrency market. The price of AVAX surged to $26.52, reaching a three-week high today, following an overnight rally on September 18th.
At the current moment, the altcoin is trading 12% higher than it was in the past 24 hours.
This increase in AVAX’s price coincided with a broader market recovery in the cryptocurrency realm due to a positive macroeconomic environment.
The optimism in the air came after the U.S. Federal Reserve cut interest rates by 50 basis points to 4.75%-5% on September 18th.
This recent adjustment in the benchmark fed funds rate signaled a change in monetary policy geared towards controlling inflation and fostering economic growth.
The Fed’s decision marked the first rate decrease in four years and only the third time policymakers have initiated a rate-cutting cycle with a 0.5% reduction.
While largely expected, the outcome led to fluctuations in both the stock and cryptocurrency markets. Data from IntoTheBlock indicated that as a result of AVAX’s price surge, 49% of token holders are now in a profitable position.
Expectations are high for further rate cuts in the final quarter, but opinions on how the Fed’s 50 bps cut will impact risk assets remain divided.
Some analysts suggest that the recent adjustment might only offer a temporary boost to the cryptocurrency market.
The DeFi Perspective of Avalanche
The recent uptick in AVAX’s price correlates with Avalanche’s increasing popularity in decentralized finance.
Avalanche’s total value locked, measured in AVAX, rose by 11% from 28.1 million AVAX in Q1 to 30.8 million in Q2. Data from DeFiLlama indicates that Avalanche’s TVL has been on an upward trajectory.
As of September 18th, the total value locked across all protocols on Avalanche was 38.63 million AVAX. The top three protocols in terms of TVL continue to dominate Avalanche’s ecosystem in Q3.
However, Benqi has surpassed Aave as the largest protocol on the network.
TVL is commonly seen as a crucial metric for adoption and activity within a DeFi ecosystem. Generally, a higher TVL suggests robust liquidity and user engagement, which supports a positive outlook for spot price movements.
Approaching Significant Resistance Levels
According to TradingView’s AVAX/USDT daily chart, the pair is currently trading above the 100-day Simple Moving Average (SMA) at $25.23 and the 50-day SMA at $22.82.
The midweek surge in price has propelled AVAX out of a descending channel that has been shaping its price path since late May 2024.
Nonetheless, AVAX encounters notable resistance between $27.92 and $30.14 – a range that has proven to be a major obstacle over the past three months.
This specific zone is crucial as the resistance has been tested multiple times without a successful breakthrough.
A successful breach of this level could trigger an upward movement, with bullish investors targeting $33 as the next destination.
However, failing to maintain the positive sentiment and surpass this resistance might lead to a drop below the 50-day SMA at $22.82, potentially revisiting the support level around $19.50, which was tested earlier in the month.