Avalanche’s DeFi Surge: AVAX Skyrockets Over 100% – What’s Driving the Rally?

• Avalanche maintains its bullish charge as the TVL and derivatives market hits a new high.
• With the positive boom in the ecosystem, a potential pullback might be on the horizon.

In recent weeks, the crypto market has witnessed a remarkable surge in Avalanche’s native token, AVAX, with prices skyrocketing over 100% in the past 30 days. This sudden and substantial rally has left both investors and market analysts scrambling to understand the driving forces behind Avalanche’s Decentralized Finance (DeFi) surge.

A Steady Rise in Avalanche’s Network

Avalanche’s DeFi surge and the consequent rally of AVAX are supported by a confluence of factors, including Total Value Locked (TVL) growth, vibrant DApps, network activity, and a bullish derivatives market.

Recent data from the Artemis crypto analytical tool indicates a consistent growth in Avalanche’s TVL over several months. A higher TVL is perceived as a positive sign, indicating increased security and value of the blockchain. 

Notably, CryptoDep’s recent post on X highlighted the top-performing Decentralized Applications (Dapps) on AVAX, with Trader Joe leading the pack with a volume exceeding $1 billion. Other notable Dapps contributing to AVAX’s TVL include WooFi, Paraswap, GMX, and Uniswap.

Top 10 dApps on @Avax by Volume (30d)

We present the top dApps on #Avalanche by volume in the last 30 days, according to the data from @DappRadar.$JOE $WOO $PSP $GMX $UNI $AAVE $STG $PNG $QI $AVAX #AVAX pic.twitter.com/ktgX3B3btO

— CryptoDep #StandWithUkraine (@Crypto_Dep) December 25, 2023

A closer look at Avalanche’s network activity reveals an upward trend in daily active addresses and daily transactions, indicating a surge in adoption and usage. Simultaneously, the blockchain’s captured value, represented by fees and revenue, has experienced substantial growth. The combination of increased activity and captured value contributes to the overall strength and viability of the Avalanche network.

At the time of writing, AVAX is up by 1.34% with the price pegged at $44.41 while boasting a market capitalization exceeding $16.3 billion, and a 24-hour trading volume of $1.2 billion. Notably, the derivatives market further amplifies the bullish sentiment, as reflected by a surge in open interest in AVAX futures.

AVAX’s open interest in futures has reached an all-time high of $370 million in the past week, reflecting growing bullish sentiment. The majority of this open interest (73%) is concentrated on Binance and ByBit, with Binance leading the way at 44% ($184 million) and ByBit contributing 28.8% ($119.67 million). 

Other exchanges like BingX, OKX, and Bitget also play a role in AVAX’s derivatives market strength.

Market Sentiment and Analyst Predictions

Other metrics such as social volume and weighted sentiment have remained high, indicating strong community interest. Analysts using the Elliott Wave theory suggest that AVAX is in the fifth and final wave of its upward movement, which began in September. The Relative Strength Index (RSI) stands above 50, signaling an advantage for bulls. 

Some analysts predict a target of $59 for AVAX.

Despite the positive indicators, caution is advised. CryptoQuant reports an overbought condition for AVAX’s RSI and stochastic, signaling a potential correction. Technical analysis of AVAX’s daily chart reveals the possibility of a bearish crossover in the Moving Average Convergence Divergence (MACD), and the Chaikin Money Flow (CMF) going sideways increases the likelihood of a correction soon. 

However, the coming weeks will be crucial in determining whether AVAX can sustain its bullish momentum or if a temporary pullback is on the horizon.