Avalanche Fundamentals and Their Dependence on the Crypto Market
Avalanche serves as a blockchain platform for building decentralized applications, capable of processing over 4,000 transactions per second, making it one of the fastest smart contract platforms in the industry. Its growing popularity and flexibility position it as a prime option for institutions, enterprises, and governments. Avalanche has already attracted partnerships with major entities, including Mastercard, Deloitte, Aave, Binance, and Coinbase. Numerous tokens are also available on the Avalanche blockchain, such as Aave, Chainlink, and Uniswap.
This month, Securitize Capital announced the tokenization of an interest in KKR’s $491 billion Health Care Strategic Growth Fund II (HCSG II) on Avalanche’s blockchain. Avalanche founder and CEO, Emin Gün Sirer, hailed this as a major milestone for the blockchain industry, marking the move of real-world assets onto the blockchain.
AVAX, the platform’s native token, remains closely linked to overall market trends, leaving it susceptible to further downturns. Analysts suggest limited upside potential for AVAX in Q4 2022, especially following Federal Reserve remarks indicating no rate cuts until 2024. Last week, the Fed raised its policy rate by 75 basis points to a 3.00-3.25% range, with projections indicating rates could climb to 4.40% by year-end and peak at 4.60% in 2023.
Investors remain cautious toward risky assets, and market movements will likely hinge on Federal Reserve comments. Brian Quinlivan, Marketing Director at Santiment, noted that the world remains fragile, with investors reluctant to buy more coins. AVAX’s price could drop to the $13-$15 range in the coming weeks, with traders advised to monitor Bitcoin closely when considering short positions.
Technical Analysis of Avalanche
Since reaching recent highs above $30 on August 13, AVAX has lost over 40% of its value. With its performance closely tied to the broader cryptocurrency market, AVAX is unlikely to sustain levels above $17 in the short term.
In the chart below, the marked trendline shows that as long as Avalanche’s price stays below it, a trend reversal is improbable. This places AVAX firmly in the “SELL-ZONE.”
Key Support and Resistance Levels for Avalanche
The chart (spanning February 2022 onward) highlights major support and resistance levels. Avalanche remains in a bearish phase, but a price increase above $40 could signal a reversal, with the next target near $50. Current support lies at $15, and breaking this level would trigger a “SELL” signal, potentially driving the price down to $13. A drop below $13 would expose $10 as the next critical support level.
Factors Favoring a Price Increase for Avalanche
The cryptocurrency market has faced severe selling pressure in recent months due to hawkish central bank policies and geopolitical uncertainties. While AVAX remains bearish, surpassing $40 could indicate a trend reversal. Additionally, Bitcoin’s price trajectory could influence AVAX, as a Bitcoin rally above $22,000 might elevate AVAX to higher levels.
Indicators of Further Decline for Avalanche
Given Avalanche’s reliance on the broader cryptocurrency market, further downturns are plausible. The Fed’s aggressive stance and global recession fears add to the downside risk. If AVAX breaks below the $15 support level, it could drop further to $13 or even $10.
Analysts’ and Experts’ Predictions for Avalanche
Q4 2022 is expected to be challenging for AVAX. Craig Erlam, Senior Market Analyst at Oanda, projects limited risk appetite in the near term. Meanwhile, Peter Schiff and other analysts highlight weak institutional support and strict monetary policies as key factors extending the bear market. Brian Quinlivan also emphasized investor reluctance to accumulate more coins, suggesting continued bearish sentiment.
