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Avalanche Analysis: 3 Reasons AVAX Price Rally Could Exceed $30

By:
Ibrahim Ajibade

Avalanche on-chain analysis has identified some fundamental catalysts behind the ongoing AVAX price breakout and what to expect in the coming days

Avalanche price

AVAX Price Insights:

  • Avalanche (AVAX) price retested $24 on Thursday, November 16, as the bulls reacted positively to a series of project developments within the ecosystem.   
  • Crypto analyst Hitesh Malviya that newly-launched GameFi subnets are a major driver for AVAX token adoption. 
  • On-chain data affirms the claims, showing investors have staked 36 million AVAX tokens in the last two weeks.

Avalanche (AVAX) price retested the $25 on Thursday, November 16, for the first time in over 4 months. A leading on-chain analyst, Hitesh Malviya, has identified the rapid recovery of the GameFi sector within the Avalanche ecosystem as a major growth catalyst that could trigger further AVAX price gains. 

On-chain analysis has identified some of the fundamental catalysts behind this price breakout, and how much further can the bulls drive the rally?

GameFi Resurgence on Avalanche Has Triggered Massive Adoption and Fee Burns 

Avalanche has attracted increased investor interest over the past week. On November 16, the AVAX price raced toward $24, bringing it 30-day gains to 150%.

On-chain analysis has pinpointed some of fundamental catalysts behind this price breakout. 

Recently, a prominent Crypto analyst Hitesh Malviya identified that Avalanche’s newly-launched GameFi subnets are one of the major drivers propelling AVAX adoption in recent weeks.  

A subnetwork (subnet) is a separate blockchain protocol built to operate within a native Layer-1  blockchain protocol. In the Avalanche ecosystem, these subnets supply validators that various blockchains can share.  

In an elaborate tweet, Hitesh explained that that Avalanche Gaming subnets like DFK and DEXALOT and are already processing more transactions than the Layer-1 Avalanche C Chain. 

“Avalanche subnets DEXALOT and DFK are processing more transactions than the Avalanche C Chain. —Hitesh Malviya (Crypto Analyst) 

In effect this has increased the number of tokens burned as gas fees in the past month. 

Avalanche (AVAX) Burned Fees Statistics | Source: AVASCAN
Avalanche (AVAX) Burned Fees Statistics | Source:AVASCAN

Currently, Avalanche burns 100% of revenue it generates from transaction fees. Hence, the recent spike in network traction from the gaming adoption appears to have accelerated the AVAX burn rate.

That chart above illustrates that the Avalanche network has burned 38,057 AVAX in the last 30 days. Essentially, an increased burn rate during a  rally is an indication that the price uptrend is currently being driven by organic transactional activity. 

This fundamentally implies that the ongoing AVAX price rally is powered by the underlying network activity, rather than just a case of speculators piggybacking on the broader altcoin market rally. 

Notably, according to Hitesh, new gaming subnets Shrapnel and Loco Legends are billed to “go live soon.”

If these upcoming projects have a similar level of impact as the DEXALOT and DFK subnets, it could propel AVAX price rally to historic highs in the weeks ahead. 

Avalanche Holders and Validators Have Staked 36 Million AVAX Tokens in the last 10 days

Avalanche has witnessed a noticeable increase in staking recently, further affirming that the bullish price action is driven by fundamental network activity. 

“116 new validators were recently added to the Avalanche Network. With a minimum entry requirement of 2000 AVAX for each validator, this implies that 232,000 AVAX has been staked and effectively temporarily removed from circulation.”  —Hitesh Malviya (Crypto Analyst) 

On-chain data tracker, StakingRewards, also confirmed Hitesh claims, showing there were 220.2 million AVAX tokens staked across various smart contracts as of November 3. But that figure has since rapidly increased, hitting 255.91 million AVAX as on November 16. 

This shows that Avalanche holders deposited 36 million AVAX into smart contracts within the last 10 days. 

Avalanche (AVAX) Staking data
Avalanche (AVAX) Staking data | Source: StakingRewards

Staking is a process in which cryptocurrency investors deposit their assets into dedicated smart contracts to either secure the network or participate in specialized ecosystem activities. An increase in staking during a rally is often bullish for a number of reasons. 

Firstly, staking temporarily removes tokens from circulation. For instance, the 36 million AVAX staked in the last 10 days are worth $900 million, when valued at the current prices of $24. In a strong-demand market, such a large withdrawals from market supply is likely to trigger a price hike. 

Unsurprisingly, AVAX 150% price breakout over the last 30 days, has coincided with the recent increase in AVAX staking. 

AVAX Price Forecast: The Bulls Could Reach for $30? 

With more GameFi projects upcoming, Avalanche holders and node validators could be incentivized to keep their tokens staked. If demand remains strong, AVAX price rally could enter historic highs above $30.

The Global In/Out of the Money (GIOM) data, which groups the current Avalanche investors according to their entry prices, also confirms this bullish AVAX price prediction.

It however, shows that the bears must break the initial resistance at $23 to be confident of reclaiming $30. As depicted below, 402,470 holders had bought 2.95 million AVAX at the average price of $22.98. If those investors exit early, they could trigger an AVAX price correction. 

But if the bulls can scale that sell-wall, the Avalanche price will likely reclaim $30 as predicted. 

Avalanche (AVAX) Price Prediction | GIOM data
Avalanche (AVAX) Price Prediction | GIOM data | Source: IntoTheBlock

Still, the bears could negate the optimistic prediction if AVAX price can dips below $12. But, in that case, the 771,030 holders that bought 7.97 AVAX at the minimum price of $14.96 could offer initial support. If those investors HODL firmly, Avalanche price will likely avoid a larger downswing. 

 

About the Author

Ibrahim Ajibade Ademolawa is a seasoned research analyst with a background in Commercial Banking and Web3 startups, specializing in DeFi and TradFi analysis. He holds a B.A. in Economics and is pursuing an MSc in Blockchain.

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