Avalanche rumbles with 18% gain – a change in trend coming?

Avalanche (AVAX) recently experienced a breakout above a major hurdle at $13. This particular hurdle proved to be a significant challenge for the AVAX bulls in the past weeks, hindering their upward momentum.

The jump in performance of AVAX can be attributed to several factors, one of which is the increased demand for the wrapped version of bitcoin (BTC) on the Avalanche network.

As bitcoin prices rose, more users sought to access the BTC wrapped on Avalanche, contributing to the network’s growing user base. Will the AVAX rally continue?

Avalanche price shows signs of exhaustion

AVAX is currently priced at $13.37 coingecoShows impressive performance with rally of 2.7% within last 24 hours seven day boom of 18.0%. However, a closer look shows that the momentum of AVAX’s recent gains is slowing down.

Source: Coingecko

Between June 10 and 25, AVAX gained a substantial 40% and established a price range from $9.65 to $14.25. Despite approaching the upper limit of this range, signs of exhaustion are becoming increasingly apparent.

Notably, from June 21 to 25, the AVAX price made three different highs. However, during the same period, Relative Strength Index of AVAX (RSI) and the Awesome Oscillator (AO) formed lower highs.

AVAX 7-day price climb. Source: CoinMarketCap

This divergence, known as a “bearish divergence,” suggests that the momentum behind AVAX’s recent gains may be diminishing. In technical analysis, this formation usually serves as a sell signal and often precedes a correction in the underlying asset.

Source: TradingView

Bitcoin’s Impact Could Shape the Future of AVAX

Meanwhile, a possible resumption of bullishness in bitcoin price at the start of the new week could present a challenging scenario for the bears.

The interplay between the momentum of bitcoin and the price trajectory of AVAX plays a significant role in determining the future direction of AVAX.

As one of the most prominent cryptocurrencies in the market, bitcoin serves as a major influencing factor for the overall sentiment and trends within the crypto space. Its movements often set the tone for the entire market, and AVAX, being an altcoin, is no exception to this influence.

Avalanche market cap currently at $4.6 billion. Chart: TradingView.com

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Bitcoin’s price action has historically displayed a strong correlation with the broader cryptocurrency market. When bitcoin experiences significant price volatility, it triggers a ripple effect that affects other cryptocurrencies, including AVAX.

This correlation stems from a variety of factors, such as bitcoin’s status as the benchmark cryptocurrency, its high trading volume, and its status as a store of value for many investors.

As investors and enthusiasts closely monitor these developments, the question remains in the air as to whether AVAX can overcome the sell signals and begin a renewed climb.

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