Key Takeaways:
- AVAX price dropped to its 2021 lows.
- The token price traded within a descending triangle that threatened to slash the price to zero.
- Could Avalanche ecosystem boost save the day?
YEREVAN (CoinChapter.com) – Avalanche token AVAX price traded at $12.5 in the European session on June 29 after a 2.5% daily slide. The token pared most of its year-to-date gains due to the regulatory crackdown, but technicals suggest more pain ahead.
AVAX price in a descending triangle
The Avalanche token has been trading in a pattern dubbed the “descending triangle” for over a year. The triangle entails a falling resistance line that caps the upside attempts and a flat support hindering sharp breakdowns.
Moreover, the descending triangle is a bearish continuation pattern that predicts a drop equal to the maximal triangle height after the token breaks below the lower trendline. AVAX has not confirmed the formation yet. If it does, the Avalanche token risk a drop to practically zero.
Also read: Pi Network Coin Forms Bullish Pattern, But Mainnet Launch Delay Could Derail Rally.
However, AVAX price traded below the 20, 50, 100, and 200-day exponential moving averages (EMA) and could act as additional resistance. Furthermore, declining trading volumes and the reversal in the MACD oscillator bias speak of additional strain on the token.
Avalanche user activity boost could save the day
According to crypto analytical platform Messari, Avalanche experienced a surge in daily active users, “doubling compared to the average over the past year.”
Engagement revolves around DEXs like @traderjoe_xyz and applications like Galxe. Avalanche aims to revitalize its network and foster a stronger DeFi ecosystem.
said Messari.
Meanwhile, the funds locked on Avalanche tanked throughout 2022 and didn’t recover in 2023. On June 29, the total value locked (TVL) stood at just over $690 million, while the peak in late 2021 stood at a whopping $11 billion, or 18x higher. The transaction speed on the Avalanche Network also declined throughout 2023.
The transaction count also declined in the previous three months, from 2 million in early March to 1 million in late June.
Also read: TUSD is in a new depeg and Audit controversy – what’s happening?
While the active addresses count boost is a bullish factor, it is not likely to trump the negative effects of the transaction count and speed. Regardless of the regulatory situation in the near future, traders should be cautious before entering the AVAX market.
