AVAX: Beginning of a bull run or yet another bull trap
The tenth-largest cryptocurrency by market cap has been having a really good week. In the past week alone, Avalanche has rallied over 20-25% reaching a total market cap close to $23 billion according to CoinMarketCap at press time. Even in the last 24 hours it has jumped by nearly 10%. That is raising a lot of eyebrows. And, it also raises the question if AVAX is going to be a profitable buy in the future?
Technically speaking, it can be agreed that AVAX is seeing a broader bearishness on the price charts, with the price stuck in a descending triangle. Interestingly, AVAX showed an impressive recovery from 15 March. However, it is still within the broader descending triangle. Thus, suggesting that this might just be a neat little bull trap.
AVAX/USDT | Source: Tradingview
A closer look at AVAX’s past rallies and the subsequent dips since November 2021 and the RSI from the same timeframe shows a striking correlation. Prices have been creating lower highs, thus creating the descending triangle – and each of those minor rallies got stuck at 60-65 levels on the RSI (yellow line).
Based on that precedent, with RSI’s current value at 61 – it can be expected to dip very soon. On-chain metrics for this particular coin are throwing out mixed signals. According to data from Messari, marketcap dominance for Avalanche saw a major spike recently, boding well for the short term. It topped out all the other rallies from before. Thereby, suggesting some strength in the market going forward.
AVAX Marketcap Dominance | Source: Messari
Furthermore, data from Avascan.info shows burning fees of AVAX has been rising steadily which is a positive sign. Burning tokens removes them permanently from the circulating supply and, in effect, makes the
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