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- Avalanche has emerged from a prolonged descending parallel channel.
- AVAX price underwent a critical assessment as it neared an important resistance level of $29.
Avalanche [AVAX] has significantly outperformed in the midweek cryptocurrency market. Earlier today, AVAX’s price reached a three-week peak of $26.52, continuing the rally that began overnight on September 18th.
At the time of writing, the altcoin was trading 12% higher in the past 24 hours.
The rise in AVAX’s price aligned with a broader resurgence in the crypto market, fueled by a perceived favorable macroeconomic environment.
This positive sentiment follows the U.S. Federal Reserve’s reduction of interest rates by 50 basis points to 4.75%-5% on September 18th.
The recent adjustment in the benchmark Fed funds rate signals a strategic shift aimed at managing inflation and bolstering economic growth.
The Fed’s decision marked its first rate cut in four years and only the third instance of initiating a rate-cut cycle with a 0.5% reduction.
Although largely expected, the outcome still incited volatility in the stock and crypto sectors. According to IntoTheBlock’s data, AVAX’s price increment has rendered 49% of the token holders in profit.
Market observers largely anticipate further reductions in the final quarter of the year, but interpretations of the Fed’s 50 bps cut’s impact on risk assets have varied.
Some analysts argue that the latest adjustment may only provide a temporary boost to the cryptocurrency market.
Avalanche’s DeFi Perspective
The recent escalation in AVAX price coincides with Avalanche’s growing presence in the decentralized finance sector.
The total value locked in Avalanche, measured in AVAX, increased by 11% from 28.1 million AVAX in Q1 to 30.8 million in Q2. Data from DeFiLlama indicates that Avalanche’s TVL has sustained this trend.
Source: DeFiLlama
As of September 18th, the TVL across all protocols on Avalanche stood at 38.63 million AVAX. The top three protocols by TVL continue to dominate the total value locked on Avalanche in Q3.
Notably, Benqi has surpassed Aave as the leading protocol on the network.
TVL is widely recognized as a significant measure of adoption and engagement within a DeFi ecosystem. Typically, a higher TVL indicates robust liquidity and user participation, supporting a favorable outlook for spot price movements.
AVAX Nears Critical Resistance
TradingView’s AVAX/USDT daily chart shows the pair trading above the 100-day Simple Moving Average (SMA) at $25.23 and the 50-day SMA at $22.82 at the time of writing.
The recent midweek price surge has allowed AVAX to break out of a descending channel that has characterized its price movement since late May 2024.
Source: TradingView
However, AVAX encounters strong resistance ranging from $27.92 to $30.14 – a zone that has presented a notable challenge over the past three months.
This range appears to be a pivotal point, as it has been tested multiple times without a successful breakout.
Read Avalanche’s [AVAX] Price Forecast 2024–2025
An inability to maintain this renewed enthusiasm and surpass this resistance may trigger a decline below the 50-day SMA at $22.82, potentially dragging the price toward the support level around $19.50, which was tested earlier this month.
