Home / Analysis / Crypto / Technical Analysis / AVAX Price Could Rally 390% Despite Avalanche’s Revenue Challenges

AVAX Price Could Rally 390% Despite Avalanche’s Revenue Challenges

Published
Valdrin Tahiri
Published
By Valdrin Tahiri
Edited by Ryan James

Key Takeaways

  • Avalanche (AVAX) has broken out from a long-term channel.
  • The price did not increase significantly after the breakout.
  • Can AVAX regain momentum and accelerate its increase?

The Avalanche price has increased since August, breaking from a long-term corrective pattern. However, it failed to sustain its increase after the breakout and has nearly returned to its pre-breakout levels.

Nevertheless, the AVAX long-term chart is still positive. Let’s analyze the price action in different time frames and see what’s in store for the rest of the year.

Avalanche’s Revenue Problem

Previously, Avalanche made the news after the success of its game “Off The Grid”, which became the most popular free game in the Epic Games store . However, X researcher Boccaccio made a thread  outlining Avalanche’s issues with value creation.

Avalanche is seemingly shifting its focus to the gaming and institutional sectors. It currently has a stake-to-validate model and will implement a pay-as-you-go one in the future.

The first model requires validates to stake AVAX upfront, which creates buying pressure and demand for AVAX. However, staking AVAX is expensive, ranging from 16k to 256k AVAX. So, this makes launching other Layer-1s on Avalanche too expensive.

This could become an issue for GUNZ, a Layer-1 blockchain for AAA games built on Avalanche  and home to Off The Grid. It already reached 4.5 million transactions  in the past 24 hours, nearly equaling Base.

The other model that could be used in the future is pay-as-you-go, which would be much less expensive for Layer-1s since they would pay continuously based on usage. While this is more attractive for those building on Avalanche, it would give less revenue to the main chain.

Blockchain Revenue
Blockchain Revenue: Credit: Valdrin Tahiri/Token Terminal 

Avalanche is already struggling with revenue compared to other Layer-1 and Layer-2 chains. This is clear in the past 90 days of Avalanche’s revenue. Avalanche ranks 11th with a minuscule revenue of $2.05 million. Tron, Ethereum, and Solana have the top three spots with revenue ranging from $54 to $594 million.

However, not all Avalanche news is negative. Avalanche, Chainlink, and other financial institutions like Euroclear and Swift have started an initiative  to use AI, oracles, and blockchains to fix the issue of fragmented data in corporate actions.

The initiative will use Chainlink’s decentralized oracle networks to convert data from unstructured to standardized formats. Then, it will use Avalanche as a blockchain partner  for interoperability, ensuring that these data can be accessed from different environments and blockchains.

Avalanche also announced  the launch of its Avalance crypto card, which is accepted anywhere Visa is accepted.

AVAX Price Breaks Out

The weekly time frame AVAX chart shows that the price has increased since bouncing at the long-term horizontal support area of $20.50 in August. The upward movement led to a breakout from a long-term descending parallel channel that had existed since the yearly high in March. This is a sign that the correction has ended.

Even though the price broke out, it has not begun a rapid increase as would be likely after such a long-term breakout. Rather, AVAX trades very close to its breakout level of $25.

Furthermore, technical indicators have not confirmed the bullish trend reversal yet. The Relative Strength Index (RSI) is still at 50, and the Moving Average Convergence/Divergence (MACD) is below 0 even though it has made a bullish cross.

AVAX Long-Term
AVAX/USDT Weekly Chart | Credit: Valdrin Tahiri/TradingView 

However, the wave count does provide a bullish outlook. The most likely count shows a completed five-wave increase and a W-X-Y correction afterward. The descending parallel channel contains the entire correction, supporting this count.

If the next increase is the same length as the previous one, AVAX could reach a high of $133, increasing by 390%. This would be very close to the all-time high price of $146.

While the weekly chart is bullish, the daily one shows signs of weakness. More specifically, the AVAX price trades close to the support trend line of an ascending parallel channel. Also, it deviated above the minor resistance at $29 before falling below it.

AVAX Short-Term
AVAX/USDT Daily Chart | Credit: Valdrin Tahiri/TradingView 

A breakdown from the channel can trigger a decline to the closest support at $22.50. Then, the Avalanche price could begin its long-term increase.

Downside Before Upside

The long-term AVAX price chart is bullish, predicting a significant increase that can take AVAX well above its yearly high.

However, the daily chart shows weakness, making a short-term decline possible before the bullish trend reversal.

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.
Was this Article helpful? Yes No