Key Avalanche Takeaways:
- Avalanche’s Apricot upgrade enters its fourth phase.
- AVAX could fall victim to the bearish factors in the DeFi sector.
- The daily chart looks positive enough to start a new leg up.
YEREVAN (CoinChapter.com) – Avalanche (AVAX) prices crept higher Tuesday as the crypto market recovered from a massive downside move in the previous session. Additionally, the token received a boost from speculators betting on Avalanche’s upcoming “big upgrade.”
Dubbed Apricot, the upgrade shows Avalanche entering its fourth stage (AP4) and proposing to reduce MEV (miner extractable value) and contention. The AP4 also claims to bring more C-Chain fee reductions and block-based fees to the platform.
For the uninitiated, Apricot 1 commenced on March 31 and brought a 50 percent reduction in transaction fees. Apricot 2 launched on May 10 and focused on enhancing the Avalanche Native Token (ANT: transfer token on the C-Chain). Apricot 3 followed on August 24 and claimed to lower the C-Chain fees by 66 percent.
According to the announcement on Tuesday, the upcoming Avalanche upgrade will go live on Sep. 22 at 9 p.m GMT. However, the platform reminded its validators to upgrade their nodes before activation to avoid reward losses.
Avalanche further expanded on the upcoming changes, noting that the consensus engine (dubbed Snowman) is getting a boost.
Without the introduction of any optimizations, contention on the Avalanche network would increase commensurately with additional usage (as the competition for extractable value on-chain intensifies with additional TVL)specified the Avalanche team.
Considering the upgrade, AVAX could continue the bullish streak, but there are also bearish tendencies across the market that traders shouldn’t ignore.
Bearish development possible?
There is evidence to suggest that the DeFi sector as a whole is in a setback phase at the moment. The total value locked (TLV) in all DeFi projects has declined by 11 percent, from $190 billion on September 6 to $168 billion on September 21.
On the other hand, Avalanche saw its TVL increase almost 700 percent in the past month, going from $337 million on August 17 to $2.69 billion on September 21. However, the platform is still dependent on the overall climate of the crypto market and the DeFi sector in particular.
As Bitcoin enjoys a great deal of influence on the rest of the altcoins, AVAX price action correlates with the developments on its native blockchain and the BTC/USD pair trading. As a result, the alpha crypto saw an over 10 percent fall on Monday, and AVAX complied, mirroring the bias with a 20 percent decline.
As Bitcoin started to recover in the early hours of the Asian-Pacific session, AVAX followed with a 12 percent ascend. However, should the flagship cryptocurrency drop again, Avalanche could follow suit.
Moreover, the US Securities and Exchange Commission (SEC) and its chair Gary Gensler built up the regulatory scrutiny in the DeFi sector. It put decentralized exchanges in the limelight this time, focusing on “protecting investors’ interests.” However, other DeFi projects, like Avalanche, could suffer the side effects of the SEC’s decisions.
Despite bearish factors, the AVAX daily chart is painting an optimistic picture. The digital asset traded at $61.1 in the European session Tuesday and might be primed for a new leg up.
Avalanche ready for a boost
AVAX has been trading in an ascending channel for the past three weeks. The parallel trendlines restricted the price action while driving it up and preventing sharp breaks in either direction. The channel itself does not suggest any particular continuation, rather providing a reference for traders to acknowledge and place their bets accordingly.
Moreover, the digital asset confidently traded above its 20-day exponential moving average (EMA-20; blue wave on the chart above). At the time of writing, AVAX has arrived at a significant resistance level at $63.3. If the token conquers the said line, it could register a new high over the $77.3 all-time high on Sep. 19.
As AVAX depends not only on Avalanche’s blockchain developments but on the crypto market as a whole, it is tough to predict the future direction with much certainty.
The DeFi sector has seen increased volatility due to Bitcoin’s setback and the SEC’s focused attention. However, as of the moment, Avalanche’s direction seems to take a bullish turn, considering strong fundamental developments on the blockchain and bullish signs on the charts.