NOIDA (CoinChapter.com) — Avalanche’s upcoming token unlock could unleash bearish tailwinds against its native token, AVAX, in an otherwise bullish outlook for the token driven by partnerships and a bullish technical pattern.
In Feb. 2024, the Avalanche network will unlock approximately 9.54 million AVAX tokens worth around $320 million. The move would increase liquidity and potential selling pressure as early investors might cash in on their holdings.
The unlock coincides with an anticipated altcoin season amidst Bitcoin’s consolidation phase following the approval of spot ETFs in the US, suggesting a dynamic shift in market trends and investor strategies.
However, the Avalanche team might negate the token unlock’s bearish impact through partnerships. Avalanche has recently partnered with Skypath Securities to develop a mobile defense platform.
Moreover, the Avalanche-based P2P NFT lending protocol Salvor contracted security firm Omniscia to audit Salvor’s contracts.
In addition, Avalanche announced strategic partnerships with traditional finance giants like JPMorgan Chase and CitiBank for RWA projects and to support the firms’ blockchain infrastructure needs.
Furthermore, the AVAX team initiated a $50 million fund dedicated to RWA research and development in Dec. 2023. Avalanche has also positioned itself in the GameFi sector, attracting top gaming studios with its scalable blockchain architecture
AVAX’s Bullish Pattern Could Negate Token Unlock Impact
The Avalanche token has formed a bullish technical pattern called the ‘Bull Flag pattern.’
Bull flags consist of a flag pole, resulting from a near-vertical rise in the crypto token’s prices. Assets in a strong uptrend often form the pattern.
A period of consolidation succeeding the steep uptrend forms the flag of the pattern. Despite the strong vertical rally, the asset price does not drop as bulls maintain the buying pressure. As a result, the breakout from the flag pattern often results in a powerful uptrend.
The pattern is completed when the price breaks out of the flag area, continuing the previous upward trend. Traders calculate the price target of the breakout by adding the length of the flag pole to the breakout price level.
Per the rules of technical analysis, AVAX price might rally over 418% to reach the theoretical price target near $206 if it confirms the pattern.
Bears Push Down AVAX Prices
Meanwhile, bears pared AVAX gains on Feb. 11, ending the token’s 4-day-long bull run. If the bears continue pushing the token’s price down, AVAX could drop to the 20-day EMA (red wave) support near $36.
Breaking below the immediate support could force the token to test the support near $30.
On the other hand, if Avalanche partnerships help avoid a bearish outlook after the token unlock, the token might rally to the resistance near $44.4. Moreover, flipping the immediate resistance could help AVAX price target the resistance near $51 before retreating.
The RSI remained neutral for AVAX, with a reading of 62.5 on the daily charts