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The bullish setup emerges as traders raise their upside bets on smart contract protocols that rival Ethereum.
Avalancheās AVAX token looks poised to hit $80, as per a classic technical pattern, after hitting a new high of over $65 on Sept. 12.
Dubbed as a ābull flag,ā the structure emerges as a brief sideways/downward trend following a strong price move higher. As a result, bull flags tend to look like downward sloping channels, represented by two parallel trendlines that trap the price action.
Additionally, a marketās underlying trade volume dries up as prices move lower, indicating weakness in the downtrend. Therefore, bull flags typically resolve following a break above their upper trendlines, with prices pushing as high as the previous uptrendās height ā i.e., āflagpole.ā
AVAXās price action since Aug. 17 has apprehensively led to the creation of a bull flag pattern.
AVAX/USD daily price chart featuring bull flag. Source: TradingView
The chart above shows the structureās fruition, right from the $37-long uptrend (flagpole) to a downward sloping channelās formation to an upside breakout. As a result, AVAX now looks to be targetting $80.
That is primarily because of a bull flagās popular profit targets; analysts look for the price to break higher with a length equal to the flagpoleās size. Therefore, measuring from the breakout level ($45.64), the AVAX profit target comes to be around $82.
AVAX/USD daily price chart featuring bull flag profit target. Source: TradingView
The setup appeared as the Avalanche token reached another record price level, hitting $66.47 for the first time, following a 618% rebound rally from its July 20 low of $9.25. Meanwhile, on a year-to-date timeframe, its gains are an astonishing 1,988%.
DeFi and NFT boom behind soaring AVAX
The rally in AVAX markets closely followed similar moves across tokens from smart contracts platforms that rival Ethereum, the leading public ledger behind the booming decentralized finance (DeFi) and nonfungible token (NFT) space.
But Ethereum's reign as the top smart contract protocol has come under challengeĀ due to its expensive transaction costs and network congestion issues. As a result, the market has made space for so-called āEthereum killersā like Solana, Cardano, Fantom, Avalanche and others.
For instance, the total value locked (TVL) inside the Solana ecosystem has jumped by 165% in the past seven days, according to DeFi Llama, while SOL/USD has jumped by over 42% in the same timeframe.
Similarly, Fantomās TVL has soared 12.73%, with FTM/USD exchange rates rising by 39% in the last seven days. As for Avalanche, the TVL has spiked 0.5%, and AVAX/USD has risen by 41.10%.
Blockchains and their TVL performances. Source: DeFi Llama
In contrast, Ethereumās TVL has declined by 22.69%, signaling liquidity migration to rivaling chains.
AVAX/USD started rallying particularly after the Avalanche Foundation launched its namesake DeFi incentive program on Aug. 18. The organization allocated $180 million to DeFi protocols that want to migrate from Ethereum to Avalanche.
Related:Ā Avalanche Rush to give out more than 180M in DeFi incentives
Benqi, a decentralized non-custodial liquidity market protocol built atop Avalanche, received $3 million from the foundationās grant.
Benqi is the leading DApp by TVL in the Avalanche ecosystem. Source: DeFi Llama
Avalanche also witnessed growth in the NFT and DeFi projects looking to run atop its public ledger. That includedĀ a partnership with Topps, a collectible and trading card maker that employed the Avalanche blockchain toĀ launchĀ its ā2021 Topps Major League Baseball Inception NFT Collection.ā
Nonetheless, Ethereum remains the dominant force in the smart contract space. The project is undergoing major network upgrades to resolve its scalability and network fees issues by completelyĀ updating its core proof-of-work protocol to proof-of-stakeĀ by next year.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should conduct your own research when making a decision.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.