- AVAX/USD rallied into overbought territory with RSI readings close to 100.
- A slew of technical and fundamental factors fuelled AVAX’s 484% run
- Avalanche’s native token risks dropping significantly
JAIPUR (Coinchapter.com) – After an explosive 484% rally, Ethereum competitor Avalanche’s AVAX token risks correcting significantly.
The AVAX/USD pair’s face-melting run from $9.3 to $53.6 pushed it heavily into the overbought territory, thereby creating an ideal setup for sellers to book profits aggressively. A similar scenario took shape in February earlier this year when prices soared to $60, pumping relative strength index (RSI) numbers to 97.17.
What followed later was a 63% correction to $22. The token awaits a similar fate even with many factors that dismiss the end of bullish sentiment.
What Caused Avalanche’s Token To Fly?
Avalanche announced Avalanche Rush, a $180 million liquidity mining incentive program, on Aug 18, collaborating with Aave and Curve Finance.
Both are the leading protocols in the Ethereum DeFi ecosystem as per usage and total value locked (TVL) numbers. In addition, Aave is a decentralized borrowing and lending platform, while Curve Finance lets users tap liquidity from a liquidity pool for efficient stablecoin trading.
With Aave and Curve Finance launching on Avalanche, users would receive liquidity mining incentives to the tune of $20M AVAX (for Aave users) and $7M AVAX (for Curve users) over three months for Phase 1.
Plus, the Avalanche Contract-Chain (c-chain) went live on the global cryptocurrency exchange OKCoin. It would allow users to transfer AVAX to c-chain integrated wallets seamlessly.
The AVAX/USD pair also received great liquidity infusion on the back of the impending Apricot Phase Three network upgrade. The same would cause a 66% drop in transaction fees upon activation.
While fundamentals did cause buyers to load up on Avalanche’s token, a bullish technical setup also paved the way for soaring AVAX prices.
Daytraders anticipated substantial gains ahead for the AVAX/USD pair in light of a golden cross formation on Friday. The bullish setup involves the 50-day moving average (50-day MA) crossing over the 200-day moving average (200-day MA).
Golden crosses are considered bullish indicators and an opportunity to place buy bets for upcoming price runs. AVAX formed a golden cross when the token’s upward move was at its prime. However, the technical event retained bullish confidence, causing AVAX/USD spot rates to almost reclaim the previous all-time high.
AVAX Price Levels To Watch
Sellers entered AVAX markets during Tuesday’s early morning London session and pulled down prices to $48.26. As a result, the AVAX/USD pair could fall to the $33-$37 range if the bearish pressure continues.
A further push below the said range would cause prices to drop to the $20-$25 range.