Due to a major flurry of positive catalysts this week, the recent buying session in the Avalanche market gained traction.
As it broke out of a classic bullish pattern earlier this week, Avalanche (AVAX) improved its case for a potential upside run towards $160 in the coming sessions.
The pattern is known as a “bull flag,” and it appears when the price consolidates lower/sideways between two parallel trendlines (flag) following a strong upward advance (flagpole). Later, the price, in principle, breaks out of the channel range to continue the uptrend and tends to increase to the height of the flagpole.
Over the last 30 days, AVAX has followed a similar price pattern, with an approximately 100 percent flagpole rally to almost $150, followed by a more than 50 percent flag correction to $72, and a breakout move above the flag’s upper trendline (about $85) on Dec. 15.
After breaking out of its bull flag range, AVAX price continued to rise, reaching almost $120 on Friday, with a bullish continuation objective near $160 in sight. After adding the height of AVAX’s flagpole, which is around $75, to the present breakout point near $85, the level appeared.
AVAX has had a week full of bullish moves
Avalanche added the native form of USDC, a dollar-pegged stablecoin produced by Circle, to its blockchain on Tuesday, sending AVAX up over 10%. Avalanche was also named a credible alternative to the main smart contract platform Ethereum in a report published by Bank of America analysts on Dec. 10. AVAX gained another 16 percent as a result of this.
AVAX surged to a two-week high on Thursday after BitGo, a crypto custodian with over $64 billion in assets under management, declared its support for the coin.
Nonetheless, AVAX was pushed lower by a small selloff at the local price peak. Avalanche announced Friday that it has partnered with DeFi Alliance, a web3 accelerator, to develop a gaming accelerator program.
1/ Avalanche is collaborating with @DeFiAlliance to bring its accelerator programs to the Avalanche community
Apply by Jan 7 here: https://t.co/6HcJOLxKxA
Before you apply, check these reasons why Avalanche should be your preferred platform: pic.twitter.com/GhdHBhQNgb
— Avalanche (@avalancheavax) December 17, 2021
All of the preceding events pointed to the Avalanche ecosystem’s expansion. The project promises to provide a viable alternative to Ethereum’s excessively expensive Tether (USDT) stablecoin transactions using USDC, for example.
Avalanche also looks to be preparing for authorized investors by appointing BitGo as its institutional custodian. BitGo’s CEO, Mike Belshe, explained:
“Institutional custody is not the same as retail custody, and BitGo wallets and custody were designed from the ground up to meet the needs of institutional investors, and BitGo is the only independent qualified custodian focused on building the right market structure and facilities to enable institutions to enter the digital asset space with confidence.”
Price risks associated with AVAX
One of the remaining downside risks associated with AVAX is the overall performance of the crypto market. Amid more detail, AVAC recovered in a week that saw the whole cryptocurrency market capitalization drop by more than $114 billion, with leading crypto assets Bitcoin (BTC) and Ether (ETH) falling by more than 7% and 5% week-to-date, respectively.
The market selloff was sparked by fears about the Federal Reserve’s tapering plans. As a result, it appears that traders saw AVAX as a short-term hedge against the crypto market’s recent decline, which was fueled by a slew of positive news.
Furthermore, at the time of writing, the AVAX/BTC pair was up nearly 40% week-to-week at around 0.00245 BTC, with the pair’s relative strength index (RSI) entering overbought territory. This may cause AVAX to lose ground against BTC in the next sessions. AVAX/weekly USD’s RSI is hovering near overbought levels, thus a similar outcome is possible.
The pair, however, is likely to maintain its bullish bias as long as it remains above its 20-week exponential moving average (20-week EMA) as support. Since August 2020, the green wave has been capping AVAX’s downside attempts, as indicated in the chart above.
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