Avalanche Usage Declines Despite AVAX Price 65% Rebound in 2023

Key Takeaways:

• Avalanche network recorded a drop in daily active addresses and transactions but increased market cap.
• AVAX price has formed a bullish technical pattern.

NEW DELHI (CoinChapter.com) — Avalanche enjoyed a mixed first quarter in 2023, with its market cap rising 65.8% QoQ (Quarter on Quarter). However, the blockchain platform recorded a decline in daily average active addresses and transactions, noted Messari in its State of Avalanche report.

Avalanche’s daily average active addresses across the C-Chain (one of Avalanche Network’s primary blockchains) and subnets declined by 20.7% QoQ. However, Messari noted that the decline could be attributed to a spike in Q4 due to a surge in NFT minting.

Furthermore, the blockchain platform saw a drop of 33.6% in average daily transactions on its subnets. In contrast, the C-Chain saw transaction numbers drop by 2.7%. Therefore, a 77% decline in transactions on the StepNetwork likely caused the drop in transaction numbers on the Avalanche subnet.

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Avalanche’s finances improved in the first quarter of 2023. Revenue in AVAX increased by 10.8% QoQ, or 25.9% in terms of US dollars. In addition, an 18.2% QoQ increase in transaction fees contributed to Avalanche’s improved financial performance.

The DeFi platform noted a decline of 34.3% in TVL in terms of AVAX tokens. However, the TVL increased by 4.2% QoQ in dollars, “suggesting an asset price increase in USD rather than new capital inflow,” Messari noted.

Meanwhile, liquid staking derivatives and yield farming platforms, such as Benqi, Vector Finance, Trader Joe, etc., increased TVL. But Aave, the most prominent DeFi protocol by TVL (USD), saw a QoQ decline of 5% in TVL.

In addition, secondary sales of Avalanche NFTs declined by 31.6% QoQ in 2023.

AVAX Price Forms A Bullish Technical Pattern

AVAX, Avalanche’s native token, has formed a bullish technical pattern called the ‘Bull Flag.’

Assets with strong uptrends usually form the pattern. Bull flags consist of a flag pole, resulting from a near-vertical rise in the crypto token’s prices.

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.

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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 might rise to $42.5, a jump of 149% from current levels.

AVAX Price Action Lacks Vigour

Meanwhile, zooming on to the daily timeframe shows AVAX price crabbing between $15 and $21 for 2023. Currently, the Avalanche token is struggling to break above the 20-day EMA (red wave), 50-day EMA (purple wave), and 100-day EMA (blue wave) resistance confluence.

The Avalanche token price dropped nearly 3% on May 4, forming a daily high near $16.8 before bulls moved to defend a multi-week ascending trendline support. If bears force the AVAX price below the trendline support, the Avalanche token might drop to its support level near $15.5.

Moreover, a continued sell-off could force AVAX’s price to drop to $13.9 before recovering.

On the other hand, if bulls manage to break above the EMA resistance confluence, the AVAX price might rise to the resistance near $18.2. Furthermore, breaking and consolidating above the immediate resistance level could help the Avalanche token price target resistance near $20.1 before corrections pare gains.

The relative strength index for AVAX remained neutral, clocking at 45.3 on the daily charts.