Avalanche (AVAX) continues to make gains, bucking the trend in the wider crypto market as it tries to get back towards the new ATH level it surged to earlier this week, powered by the rising interest in the DeFi space among investors. At the time of writing, AVAX/USD is trading around $55.25.
Smart contracts and DeFi are the latest buzzwords in the world of cryptocurrencies, and an increasing number of investors – both retail and institutional, are looking for opportunities that offer more versatility and use cases beyond transactional. Avalanche is one of the emerging players in this space, turning into an attractive ecosystem for dApps in the short span of a year since its mainnet launch on the back of high TPS and energy efficiency.
One of the reasons, however, that could have caused its sharp slide lower from its ATH is the news of a hack of a DeFi protocol on its network. Zabu Finance, a DeFi and yield farming protocol running on the Avalanche ecosystem, recently lost $3.2 million in funds after hackers exploited a serious vulnerability in its liquidity pool. News of hacks reduces investor confidence in a blockchain network and sends the value of its native token, AVAX in this case, lower.
However, Avalanche continues to enjoy strong traction among developers ever since the launch of its incentive program, Avalanche Rush, with its TVL soaring almost 10 times higher, from around $250 million about a month ago to nearly $2.4 billion till date. Analysts have observed a steady outflow of TVL during the corresponding period from market leader Ethereum, suggesting that projects are looking for alternative networks as the Ethereum blockchain suffers from network congestion and high gas fees.
On the technical front, popular crypto analyst and trader Smart Contracter expects more upside for the potential Ethereum killer after it undergoes a bit of a correction. In a recent update on social media, he expects Avalanche’s AVAX to target the key $100 mark, which would mark a rally of almost 100% from its current price.
Key Levels to Watch
On the H4 chart of AVAX/USD, we can see a strong bullish bias among moving averages and the momentum indicator. Although, the MACD points to some selling interest prevalent in the market as well.
Avalanche’s price is sitting above the pivot point at $51.72 and an uptick in buying interest can take it back to the ATH and beyond until the first resistance at $72.34. However, this could be a slow process if investor sentiment remains under pressure towards cryptocurrencies in general.