Key Takeaways
- Avalanche has a significant spike in active addresses this year.
- The AVAX price trades inside an essential support level at $15.
- Can AVAX bounce, or will it break down to single-digit lows?
AVAX has underperformed in the current market cycle, failing to approach its all-time high of $148.18.
A significant rally occurred in April and May, boosted by a surge in active addresses.
However, last week’s downturn has negated most of the previous gains, and AVAX risks a breakdown at a key horizontal support level.
Avalanche Network Activity
Avalanche had a significant spike in network activity this year, coinciding with a similar price increase in May.
In an interview with CCN, Messari Avalanche analyst Matthew Nay outlined some of the reasons for this increase in activity.
The big jumps recently have been from the meme coins launching natively on the C-Chain and from a couple of other L1s – Lamina1 and QChain.
Nay said that for the AVAX price to reflect this increase, the C-Chain must contain these addresses, which did not happen in June.
The number of active addresses fell significantly after the spike in May.
Nay explained that gaming is the most significant growth driver among the three categories of decentralized finance (DeFi), gaming, and real-world assets (RWA).
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Pulsar and FK, both gaming-specific chains, were the two largest L1s by average daily transactions in the first quarter.
Nay believes that Avalanche will focus on DeFi, gaming, and institutional partnerships for the rest of the year.
Avalanche has seen the success of DeFi and gaming, and there was recently an RWA partnership with New Jersey Municipalities to digitize property records.
AVAX Returns to Support
The AVAX price bounced in April and reached a high of $26.84 in May, aligning with the spike in active addresses.
However, the price failed to sustain its increase and lost nearly all its gains from the bounce.
More importantly, the price of AVAX trades close to the $15.50 horizontal support area. A breakdown below could cause another 50% price decrease to the next support at $10.50.
Technical indicators are bearish. The Relative Strength Index (RSI) and the Moving Average Convergence/Divergence (MACD) are falling.
Furthermore, the wave count is bearish. The April 7 bounce is a three-wave A-B-C structure, a sign of a long-term bearish trend.
Therefore, the long-term AVAX price prediction is bearish, suggesting a breakdown toward $10.50 is inevitable.
While short-term bounces could occur, a breakout from the descending resistance trend line is unlikely.
AVAX Price Risks Breakdown
Avalanche active addresses surged in Q1 driven by new meme coin launches.
The AVAX price analysis is bearish, suggesting a breakdown below $15 is likely.
If that happens, the Avalanche price could fall to $10.50.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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