Avalanche (AVAX) Surges Nearly 120% This Month, Approaching Overbought Territory

On November 21, 2023, Avalanche (AVAX) has consistently led the layer-1 sector over the past week. However, data from CryptoQuant indicates that the token is currently hovering at "overbought" levels.

In the past month, various layer-1 platforms have recorded impressive price increases, with native tokens surging by more than 100%, surpassing even Ethereum (ETH), which saw a modest 22% rise.

Notably, the Avalanche ecosystem has seen AVAX surge nearly 130% in the last 30 days. During the same period, Solana (SOL) and NEAR Protocol (NEAR) also experienced significant gains of 113% and 110% respectively. Additionally, daily transaction volumes on NEAR have hit new highs since late last year.

The correlation of AVAX price movements over the daily timeframe with SOL, NEAR, and ETH. Screenshot from CoinMarketCap as of noon on November 21, 2023.

Daily transaction volume on the network has also shown positive momentum. Total Value Locked (TVL) on Avalanche increased by nearly 20% this week, surpassing Arbitrum. However, transaction fees have remained balanced, with no significant inflow of new funds into this ecosystem. As Coin68 summarized, the price surge of AVAX may not be sustainable and could be driven by a whale seeking to pump liquidity to create FOMO before offloading.

TVL fluctuation on Avalanche. Source: DeFiLlama (November 21, 2023)

Further data from CryptoQuant reflects a contrasting trend. The Relative Strength Index (RSI) of AVAX is currently at 71, indicating that the market is "overbought." This pushes AVAX prices above equilibrium levels, signaling a potential decline in the token's price in the near future.

Relative Strength Index (RSI) of AVAX. Source: CryptoQuant (November 21, 2023)

AVAX is currently trading around $20.8, fluctuating slightly within 1% over the past 24 hours.

1D chart of the AVAX/USDT pair on Binance at 11:45 AM on November 21, 2023.

Collaborations with heavyweights such as JP Morgan and Citi are driving AVAX upward. Last week, JPMorgan's Onyx digital asset development team announced a partnership with Avalanche based on Singapore Monetary Authority's "Guardian" initiative.

According to Sei Labs founder Jeff Feng, high throughput and low transaction fees are the bright spots of the Avalanche ecosystem amidst the current landscape. Feng believes Avalanche is leveraging its strengths in enterprise applications, from tokenizing assets to payment processing, and is capable of addressing scalability and throughput challenges in the blockchain space.

Nansen analyst Martin Lee views AVAX's price action positively, aligning with the overall rise in the altcoin market. He also emphasizes the recent collaboration of the project with JP Morgan.

Sharing insights with The Block, a Nansen representative continues to prioritize Ethereum and suggests that organizations will choose a blockchain based on their specific needs.

On the flip side, the blockchain has faced challenges recently. Leading Avalanche blockchain explorer SnowTrace announced it will cease operations by the end of this month due to insufficient funding. Ava Labs, the entity behind Avalanche, also downsized its workforce in early November, focusing on advancing its flagship products.