Short-term profitability analysis of Avalanche (AVA)

Cryptocurrencies are volatile and unpredictable assets, but they also offer great opportunities for investors who know how to navigate the market. In this article, we will focus on one of the most promising and innovative projects in the cryptocurrency sector: Avalanche (AVA).

Avalanche is a platform that enables the creation of custom blockchains and decentralized applications (DApps) with high scalability, interoperability, and security. Its goal is to solve the “blockchain trilemma,” the trade-off between decentralization, scalability, and security. Avalanche claims to achieve over 4,500 transactions per second (TPS), sub-second completion times, and low fees, while also supporting a variety of virtual machines and programming languages.

Avalanche has its own native token, AVAX, which is used to pay fees, secure the network, and participate in governance. AVAX also acts as a bridge between different blockchains, allowing users to transfer assets across different networks. AVAX has a fixed total supply of 720 million tokens, of which 360 million tokens are in circulation.

Notable developments and events

Avalanche reached an all-time high of $147.50 in November 2021. This equates to a staggering increase of up to 1.700% from its original listing price of $3.6 in September 2020. The main drivers behind this impressive growth are:

• Launching the Avalanche-Ethereum Bridge (AEB) in early 2021: Allows users to transfer ERC-20 and ERC-721 tokens between the two networks seamlessly. This attracted more liquidity and users to Avalanche, and enabled the integration of popular Ethereum-based decentralized applications (DApps) such as Uniswap, Aave, and Chainlink.
• Launch of the Avalanche-X program in April 2022: This is a funding initiative that supports developers and entrepreneurs who want to build on Avalanche. The program provides up to $1.5 million in grants, mentoring and technical support for selected projects. Some of the projects receiving funding include Spore, a decentralized NFT marketplace, and Pangolin, a decentralized exchange (DEX) that uses an automated market maker (AMM) model similar to Uniswap.
• Avalanche is increasingly being adopted and recognized by organizations, businesses and influencers: The World Economic Forum (WEF) has selected Avalanche as one of the 1000 Most Promising Technology Pioneers of 2024, recognizing its potential to transform the global economy and society. Besides, several prominent figures in the cryptocurrency field, such as Anthony Pompliano, Michael Saylor and Mark Cuban, have expressed interest and support for Avalanche.

Market analysis and investment strategy

Avalanche (AVAX) exploded in September 2020 with a $230 million investment from a reputable group. A year later, it began trading and quickly reached an all-time high of $147.50. However, the cold winds of the 2022 crypto winter dragged AVAX to a low of $8.62 in September 2023. But like a phoenix reborn from the ashes, AVAX has kept pace with the market recovery crypto in late September, entering an Elliott Wave 5 rhythm that peaked at $50.00 on Christmas Eve – a key psychological threshold and close to the first historic resistance level of $51.25 .

Recent developments:

• Launch: AVAX launched in September 2020 and began trading a year later following a $230 million investment.
• Price history: It reached an all-time high of $147.50 shortly after listing but fell sharply during the crypto winter of 2022, reaching a low of $8.62 in September 2023.
• Recent Price Increase: Since the end of September 2023, AVAX has been involved in a price increase, reaching $50.00 on Christmas Eve.
• Correction: Since then, it has undergone a correction, with a low of $31.25.
• Future Potential: Analysts predict a possible rise to new highs above $150, but confirmation of wave two completion is crucial.

Technical analysis:

• Elliott Wave: Recent price action shows a complete Elliott Wave rhythm, with wave three likely to reach $550 in the spring.
• Resistance: AVAX needs to break above the $50-52 level, the 0.618 Fibonacci retracement level, and the all-time high of $147.
• Chart: A bullish pattern forming on the AVAXUSDT chart is promising for optimists.

Elliott Wave Analysis:

The completion of an Elliott Wave rhythm indicates the formation of a new wave one peak. This opens up interesting possibilities. The price prediction based on this wave structure suggests the possibility of a rise to uncharted territory above $150. However, confirmation of wave two completion is still important to solidify this bullish outlook.

Bullish charts and signals:

In addition to Elliott Wave, technical analysis shows a promising bullish pattern on the AVAXUSDT chart, bringing optimism to investors. This visual confirmation strengthens the case for further upside.

Investment opportunity analysis/Investment orientation for Avalanche

Recent market indicators paint a promising picture for Avalanche (AVAX), with the chart showing bullish signals and positive momentum. However, to take advantage of this opportunity, careful consideration and strategic planning is required. Here are some updated suggestions and tips based on the latest information:

Short-term strategy:

• Track trends: The chart shows a sharp decrease in red money flow with a bullish divergence, indicating the possibility of an explosion. Consider going long with a stop loss of 1-4% targeting immediate local high at $9.60 (10% profit).
• Exit strategy: Retracement of 50% from the high to the low could reach a fair price of $11.75 (33% profit). This target is consistent with the completion of the first wave 4H/1H and the start of the weekly 5th wave.
• Technical analysis: Use tools like TradingView, Pangolin, and Trader Joe to identify entry and exit points based on technical indicators and chart patterns. Watch for a potential double top formation and consider a cup and handle pattern for cautious entry.

Long-term strategy:

While short-term strategies offer immediate opportunities, AVAX's solid foundation should not be overlooked. Tools like CoinMarketCap and CoinGecko can help track its progress and development, potentially supporting long-term value.

• Basic: AVAX possesses a solid foundation with a growing ecosystem and innovative technology. Consider holding for the long term, leveraging tools like CoinMarketCap and CoinGecko to track its growth.
• Staking: Earn passive income by staking AVAX on the network, potentially bringing in profits up to 10% annually. Tools like Avalanche Explorer and Avascan help compare validators and their fees.

Consider the following strategy:

Investing in any cryptocurrency comes with inherent risks, and AVAX is no exception. Here are some strategic considerations for navigating the market:

• Token unlock event: The upcoming token unlock on February 21 could create a buying opportunity, but potential volatility should be kept in mind.
• Dollar Price Average (DCA): This strategy allows you to gradually accumulate AVAX over time, reducing the impact of price fluctuations.
• Double peak formation: Prepare for a possible double top, which could indicate a pullback before further gains.
• Cup and handle model: This technical pattern suggests a move up to $48 is possible, providing another entry point for cautious investors.
• Risk management: Remember, diversification and stop losses are essential tools for managing risk in any investment, especially in the volatile cryptocurrency markets.

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