The cryptocurrency market has experienced a robust surge over the past three days, with Bitcoin (BTC) soaring to an impressive $73,500. While many altcoins have joined the rally, Avalanche (AVAX) has been left in the dust, continuing its bearish trend. As of now, AVAX is trading at $26, reflecting a 2.04% decline over the past day. This downward trajectory has persisted on the weekly and monthly charts, with losses of 4.07% and 8.3%, respectively.
As the market conditions evolve, analysts are turning their attention to AVAX’s potential trajectory. Among them is Cryptoquant analyst Burak Kesmeci, who suggests that Avalanche may be undervalued based on its Market Value to Realized Value (MVRV) score. Currently, AVAX’s MVRV score has risen to 0.82, a level historically associated with undervalued assets. Kesmeci notes that during the previous bull market in 2021, AVAX’s MVRV score climbed from 0.64 to 1.27, coinciding with a monumental price increase from $5 to an all-time high of $146.
However, caution is warranted as AVAX’s price could become overheated if the MVRV exceeds 1.11. Historical trends show that when the MVRV has surpassed this threshold, it has often indicated a reversal in price trends. Therefore, for AVAX to unlock its true value, its MVRV score must rise above 1 but remain below the critical 1.11 point.
Market Activity Points To Potential Growth
Kesmeci’s analysis also highlights notable on-chain activity as a signal of Avalanche‘s undervaluation. Recent data reveals a significant increase in large transaction volumes, skyrocketing from 1.87 million to 6.71 million. This surge indicates that whales and institutional investors are accumulating AVAX, signaling their belief that current prices do not reflect its true value.
Moreover, the total number of Avalanche addresses has grown from 9 million to 9.13 million, suggesting a sustained interest in the network despite falling prices. Interestingly, daily active addresses have also increased from 60,000 to 86,330, further underscoring the disconnect between rising on-chain activity and declining market prices.
What Lies Ahead for AVAX?
With strong market fundamentals in place, analysts believe that AVAX could soon experience a correction to reflect its underlying value. If the MVRV score continues its upward trend, AVAX might reach a target price of approximately $30.80 in the near term. However, if the prevailing bearish sentiment persists, there is also a possibility of a decline to around $24.
In conclusion, while Avalanche may currently be facing challenges in a bullish market, indicators suggest it could be poised for a rebound. With increasing MVRV scores and growing network activity, AVAX stands at a crossroads. Investors should keep a keen eye on its performance in the coming weeks, as the potential for growth remains tantalizingly within reach.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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