AVAX’s recent breakout from its falling-wedge consolidation pattern is already starting to lose momentum. In fact, the altcoin’s prices slipped by 9% just recently – Pointing to early signs of exhaustion from bulls.
Additionally, at the time of writing, the token’s Stochastic RSI was just bouncing off from an overbought zone, hinting at an exhaustion phase.
Source: TradingView
A step towards regional adoption
The timing here is especially interesting, with AVAX’s recent price movement coming on the back of Avalanche Foundation announcing the establishment of a Distributed Ledger Technology (DLT) Foundation within the Abu Dhabi Global Market (ADGM).
According to the announcement, the initiative is designed to enhance transparency and accelerate token adoption across the Middle East. This will be a strategic move that could strengthen long-term demand for the Avalanche ecosystem.
Could rising adoption and buyer dominance engineer a bullish reversal?
Consequently, the question now is whether rising adoption and strengthening buyer dominance could engineer a bullish reversal.
With adoption set to expand and buyer interest gradually building, AVAX could attempt a fresh bullish recovery once the ongoing correction begins to cool off. In fact, the altcoin’s Taker Cumulative Volume Delta data hinted at a surge in buyers’ dominance over the last 2 weeks.
Source: CryptoQuant
Additionally, if momentum returns, the next meaningful reaction is likely to develop near the wedge’s upper resistance level – An area that has historically triggered price responses.
A look at contract activity and TVL
AVAX’s on-chain data seemed to offer a somewhat mixed outlook though.
Consider this – Avalanche’s ecosystem contract activity has significantly risen this month. The number of transactions on the ecosystem surged by 0.2 million to 6.9 million over the last 24 hours alone, signalling heightened network usage.
Source: Token Terminal
On the other hand, AVAX’s Total Value Locked dipped by 5%, despite holding its broader structural trend.
The fall in the token’s Total Value Locked may be indicative of a strategic disbursal by holders to generate the required liquidity for the next major move.
Source: DefiLlama
What’s next for AVAX?
On the daily chart, the altcoin’s structure has been bullish with the wedge resistance a key reference point for the price action’s next trajectory. The liquidity cluster around the $13-level could be the next target.
Finally, the projected long-term gains on the adoption and activity fronts might hint at a potential reversal ahead at the wedge support.
Final Thoughts
- Avalanche’s ADGM-based DLT Foundation could accelerate token adoption across the Middle East.
- Despite a hike in buyer interest, AVAX’s recovery still depends on demand returning at key technical levels.
