- 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?
Fundamentals
Avalanche announced Avalanche Rush, a $180 million liquidity mining incentive program, on Aug 18, collaborating with Aave and Curve Finance.
Related: AVAX soars as Avalanche announces Aave and Curve Finance integration to a $180M project.
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.
Golden Cross
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).
Related: Avalanche hits record high following 484% AVAX rally; what’s driving it upward?
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.
