Amid a significant breakout from a long-standing downtrend, Avalanche (AVAX) has shown a remarkable price increase, doubling its value and attracting attention from traders. As the market assesses whether this growth will continue or if a correction is looming, market participants are closely monitoring key levels to anticipate the next move for the cryptocurrency.
AVAX’s Remarkable Upward Trend
Following a crucial breakout above a macro downtrend line and a subsequent successful retest, Avalanche’s price skyrocketed from around $21.56 to a recent peak of $47.81. The breakouts were met with strong bullish sentiment, propelling the digital asset to double in value in just a few weeks.
In November, the monthly candle closed above a critical support level at $38.57, consolidating buyer control at this price. Analysts, including Rekt Capital, have highlighted the significance of maintaining levels above $38.57 into December, suggesting that doing so could set the stage for further price appreciation.
Crucial Levels to Watch
Key levels like the $38.57 support level are pivotal for maintaining the current uptrend. However, challenges lie ahead at the resistance levels of $43.18 and $47.81, with the latter historically acting as a zone of price rejection.
If AVAX manages to uphold levels above $42.81 and surpass $47.81 in the short term, analysts predict the next major target at $60, signifying a continuation of the recent bullish momentum.
Monitoring On-Chain Activity and DeFi Participation
Recent on-chain data has revealed a significant uptick in user engagement on the Avalanche network, with new addresses increasing by 51.83% and active addresses growing by 24.69% over the last seven days. Additionally, zero-balance addresses have surged by 21.57%, suggesting a rise in adoption.
The Total Value Locked (TVL) on Avalanche has also seen a 9.09% surge in the past 24 hours, reaching $1.443 billion according to DeFiLlama. Stablecoin market capitalization stands at $1.955 billion, with daily fees and revenue hitting $75,998, indicating heightened ecosystem activity alongside the price surge.
Possible Retracement in Sight
Technical indicators like the Bollinger Bands signaled that AVAX is trading above the upper band, a sign of increased volatility and potentially overbought conditions. A retracement towards the 20-day Simple Moving Average (SMA) around $32.70 could materialize if bullish momentum subsides.
While the MACD indicators suggest positive momentum, traders remain wary of potential overextension, as peaks in the histogram often precede short-term consolidations or corrections in the price.