Why the price of Avalanche (AVAX) might quadruple by March 2023
As the cryptocurrency market recovers, Avalanche’s partnership with Amazon Web Services led to a rise in the price of AVAX.
In the first two weeks of 2023, Avalanche went up by almost 55%. Now, a mix of technical and fundamental indicators suggests that the token will keep going up into March. AVAX’s price is about to break out.
Since May 2022, it looks like the AVAX/USD pair has been making a “falling wedge” pattern. This pattern has now reached the “breakout” stage.
A falling wedge is made when the price goes down within a range defined by two falling trendlines that meet in the middle. When the price breaks out of its range to the upside, the pattern is over. Technical analysis says that the price can go up only as far as the space between its upper and lower trendlines.
When the theory is applied to AVAX’s falling wedge pattern, the breakout target for the token is around $34, which is a 115% increase from where it is now.
Avalanche’s Amazon partnership
As Ava Labs, the company that made the Avalanche network becomes an official blockchain solution provider for Amazon Web Services, this looks like a bullish sign for AVAX (AWS).
Notably, the company will add new features that make it easier for developers to use the AWS Marketplace to run an Avalanche node. Avalanche also lets developers make subnets with just a few clicks.
In a perfect world, the partnership will make Avalanche more useful for businesses and governments, which could increase the demand for AVAX tokens. Because of these hopes, the Avalanche token has gone up by almost 30% in 24 hours.
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Macro boosts bullish scenario
The bullish falling wedge setup for AVAX appears as the macroeconomic fundamentals for riskier assets are getting better. This could be good news for the cryptocurrency market in the coming months.
According to a poll by Bloomberg, economists think that the US Consumer Price Index will go down (CPI). In an ideal world, falling inflation would cause the Federal Reserve to stop raising interest rates. This would give investors more money to put into riskier markets.
On Jan. 12, the next CPI report will be released. If the inflation rate in December comes in at 6.4%, there is a 20% chance that the S&P 500 index will rise by 3–3.5%. If inflation comes in between 6.4% and 6.5%, which is a 65% chance, the index could go up by 1.5% to 2%.
So, if inflation drops, AVAX/USD could rise along with the U.S. benchmark index, and the rally could last at least until the Fed meeting on Jan. 31.
Downside risks remain
AVAX, on the other hand, isn’t sure what to do near $15.75, which is a strong resistance level that has been supported from June to November 2022.
If the price doesn’t close decisively above the said resistance line, then a correction toward its next support line near $10.50 is more likely. As shown below, the same level of support was important in the June–July 2021 session.
In other words, AVAX’s price could fall 35% from where it is now, which could make the falling wedge setup useless.
This article does not give any advice or suggestions about investments. Every investment and trading move comes with a risk, so people should do their homework before making a choice.
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