A strong rebound that started over the weekend is gaining momentum as the cryptocurrency markets extend gains after months of pounding. Double-digit percentage gains from multi-month lows are already fuelling suggestions that the market has reached a bottom. The cryptocurrency market cap is already up by more than 5% for the week to highs of $1.26 trillion, with the total trading volume spiking 8% to $55.27 billion.
The risk appetite is slowly increasing as investors look to take advantage of discounted valuation following the deep pullbacks. A rebound in the US stock market is another factor that is offering support to cryptocurrencies’ bounce back. The Dow Jones Industrial Average was up 6.2% last week, and signaling investors are increasingly taking up risks buying the market correction.
Avalanche technical analysis
Avalanche is one of the coins leading the bounce back, going by the 15% gain over the past two days. The coin has finished on the green for the past three days, signaling a build-up in buying pressure. In addition, the Relative Strength Index is pointing up an early indicator that buyers are increasingly flocking to the market.
After a recent slide to nine-month lows of $21 a coin, AVAXUSD appears to have hit bottom and is well-positioned to bounce back as investors continue to buy on the deep. The $21 level is the immediate support level above which the coin looks set to edge higher.
However, bulls will have to steer the coin above the $37 resistance level to avert the risk of the coin edging lower in continuation of the long-term downtrend. Below the pivotal resistance level, the coin remains susceptible to further losses with short sellers in control.
While Avalanche remains bearish in the short term, its long-term outlook remains bullish as developers continue to flock to the blockchain to develop and host decentralized applications. While the coin has faced near-term headwinds due to the stablecoin platform Terra the future is looking increasingly bright.
Avalanche blockchain stands out partly because of its blazing fast speeds in the highly crowded space. The blockchain can process more than 4,500 transactions per second, making it perfect for decentralized finance. It currently trounces the likes of Ethereum and Cardano, which can only handle 15 and 250 transactions per second.
Additionally, Avalanche is rated as the fastest blockchain on the planet on time to finality, thanks to the time it takes to complete transactions. In addition, it is backed by a unique burning system that continues to reduce the supply amid increasing demand therefore expected to boost value. So far, the network has burned over 1.7 million AVAX token valued at $64 million.
The broader cryptocurrency market is trying to bounce back after the recent crash attributed to the implosion experienced at stablecoin Luna. Avalanche is one coin well-positioned to bounce back as the overall industry recovers. However, the bounce back is also dependent on the overall market bouncing back after one of the longest sell-off runs.
Avalanche coin is naturally deflationary. What this means is that the maximum supply of AVAX tokens is capped at 720 million. The limited supply amid soaring demand is one factor expected to boost the tokens price going forward.