In the recent few days, the cryptocurrency market has witnessed remarkable growth, with Bitcoin hitting $73,500.
While several alternative digital currencies have recorded substantial gains, Avalanche [AVAX] has not seen positive movement. The altcoin has continued its downward trend for the month.
At the moment, the trading price of AVAX stands at $26, reflecting a 2.04% decrease in the last 24 hours.
Furthermore, on both weekly and monthly charts, the altcoin has experienced declines of 4.07% and 8.3% respectively.
The current market conditions have sparked debates among analysts regarding the potential trajectory of AVAX.
Additionally, Cryptoquant analyst Burak Kesmeci has indicated that Avalanche appears undervalued, referencing its MVRV metric.
Is There Undervaluation in Avalanche?
According to Kesmeci’s evaluation, the MVRV score of Avalanche has seen an uptick in the last three months, reaching 0.82.
He suggests that when the MVRV score sits at this level, it signifies that the altcoin is reasonably priced. Historically, a higher MVRV value for AVAX has translated to more positive movements in its price trends.
For instance, during the bullish rally of 2021, AVAX surged from $5 to attain an all-time high of $146.
Throughout that period, the MVRV displayed a significant upward trend, climbing from 0.64 to 1.27.
Nonetheless, this upward trajectory also poses the risk of pushing AVAX into an overbought zone. Past data indicates that AVAX’s price was overvalued when it surpassed 1.11.
Thus, the AVAX MVRV score needs to stay above 1 but below 1.11.
Based on historical patterns, AVAX has shown selling opportunities after the previous bullish run at 1.11. Therefore, in this cycle, the market is linked to the 1.11 mark. To reach its actual value, AVAX must increase from the current 0.82 level to 1.11.
Analysis of AVAX’s Graphs
As per Kesmeci, the current network activity and market fundamentals suggest that AVAX could be significantly undervalued.
For example, Avalanche’s volume of large transactions has surged from 1.87 million to 6.71 million.
A high volume of significant transactions indicates that whales, major holders, and institutional investors are accumulating AVAX.
If these entities are accumulating in large numbers, it implies that they perceive the current prices as undervalued, and the market has not yet recognized its full worth.
Additioally, Avalanche’s total addresses have seen a continuous increase from 9 million to 9.13 million.
While addresses have been on the rise, prices have been decreasing, showcasing a disparity between on-chain activities and market valuation.
This observation is further supported by the growing number of daily active addresses from 60k to 86.33k.
This suggests that the underlying market fundamentals are robust, but the market value is yet to catch up.
In essence, market signals point towards Avalanche being significantly undervalued. If the MVRV score maintains its upward trend as seen in recent months, AVAX could potentially reach $30.8 in the near term.
Conversely, should the prevailing bearish sentiment persist, Avalanche might drop to $24.