AVAX’s recent breakout from its falling-wedge consolidation pattern is showing signs of losing momentum, with prices dropping by 9% recently, indicating exhaustion from bulls.
Moreover, the token’s Stochastic RSI is rebounding from an overbought zone, suggesting a phase of exhaustion.
Source: TradingView
A step towards regional adoption
AVAX’s recent price movement coincides with the announcement of a Distributed Ledger Technology (DLT) Foundation within the Abu Dhabi Global Market (ADGM) by the Avalanche Foundation, aiming to enhance transparency and accelerate token adoption in the Middle East.
This strategic move could strengthen long-term demand for the Avalanche ecosystem.
Could rising adoption and buyer dominance lead to a bullish reversal?
With increasing adoption and buyer dominance, there is potential for a bullish reversal in AVAX. As buyer interest grows and adoption expands, the altcoin may see a fresh bullish recovery once the current correction subsides.
Source: CryptoQuant
If momentum returns, the next significant reaction could occur near the wedge’s upper resistance level, historically triggering price responses.
An analysis of contract activity and TVL
Avalanche’s ecosystem contract activity has increased significantly this month, with a surge in transactions indicating heightened network usage.
Source: Token Terminal
However, AVAX’s Total Value Locked has decreased by 5%, despite maintaining its broader structural trend. This decline may suggest a strategic dispersal by holders to generate liquidity for the next major move.
Source: DefiLlama
What’s next for AVAX?
On the daily chart, AVAX’s structure remains bullish, with the wedge resistance serving as a key reference point for the price action’s trajectory. The $13-level liquidity cluster could be the next target.
Long-term gains in adoption and activity may indicate a potential reversal at the wedge support level.
Final Thoughts
- The establishment of Avalanche’s ADGM-based DLT Foundation could boost token adoption in the Middle East.
- Despite increased buyer interest, AVAX’s recovery hinges on demand resurfacing at critical technical levels.