In 2023, AVAX (Avalanche) doubled in price to $21, showing one of the best results among the TOP 20 coins bycapitalization. The reason for the growth was the news of a full partnership with Amazon. However, the metrics point to premature optimism, and investors risk falling into a bull trap.
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On January 12, we talked about partnershipan agreement between Avalanche and AWS that will introduce new services to cloud users using blockchain solutions. Since the release of the news, the coin has risen in price by 66%.
The bears suffered significant losses in the next four days: the liquidation amount exceeded $10 million.
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Working out a significant volume of stop ordersled to an even greater increase in prices and the emergence of excessive optimism: since January 24, the funding rate has been exclusively in the positive zone. This indicates the prevalence of bulls over bears in open positions on futures contracts. Accordingly, a sudden price drop below $18 will swing the pendulum in the opposite direction, and the bulls will already suffer significant losses from liquidating positions.
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The high probability of such a scenario is indicated bylack of positive on the part of fundamental metrics. Thus, the number of transactions carried out has been declining since the fall of 2022, and the number of active addresses is close to the annual minimum.
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Significant decline in interest in AVAX observedin the DeFi sector, where the amount of funds blocked this year alone decreased by 33% to 46.7 million coins. In comparison, Tron increased its TVL volume by 4% to 78.6 million coins during the same time.
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The partnership with AWS turned out to be a great marketing move, but the metrics do not record a significant surge in interest in the Avalanche network. For investors, the situation could turn into a bull trap.
Analytical group StormGain
(platform for trading, exchanging and storing cryptocurrency)
