- Avalanche saw transaction peaks in 2023, driven by ASC-20 and meme currencies, indicating growing interest and adoption.
- The growth in users and transactions, plus the expansion of sub-networks and contracts, strengthens the Avalanche and AVAX platform.
The value of AVAX is directly linked to how much the Avalanche platform is used and preferred. In an industry where competition is intense and change is constant, maintaining user preference is a daily challenge.
Every day, new solutions seek to displace established platforms. This raises the question of whether Avalanche will be able to remain attractive and up to date in the face of new competition.
Operational and Expansion Challenges for Avalanche
Overcoming technical hurdles is part of everyday life in the crypto world. Operational disruptions, however brief, can profoundly affect the operation and perception of the platform.
In addition, the challenge of expanding capabilities without compromising security and decentralized management is constant. With goals such as processing 100,000 transactions per second after the Vryx upgrade , the question is whether it will be enough to maintain its leadership position.
Volatility is an inherent feature of the cryptocurrency market, and AVAX is no exception. With extremely varied price predictions, uncertainty arises about the safety of investing in AVAX.
Speculation plays a central role, although the search for stability is fundamental for investors.
Increased Activity and New Contracts on the Network
These spikes in activity were first due to something related to tokens called ASC-20, and the second spike occurred because of an increase in transactions with meme coins, which are types of cryptocurrencies inspired by jokes or viral topics on the internet.
Thanks to these busy times, the network attracted more new users than the number of users who were already active, meaning that the platform became more popular.
Moreover, in the month of January, compared to October of the same year, the number of daily transactions people made on this network grew by 36.4%, which is quite a large increase.
To top it off, between the end of 2023 and the beginning of February 2024, many new projects and subnetworks were added to the platform, where more than 249,000 new contracts (digital agreements) were created and more than 75 million transactions were carried out.
What do the Charts tell us?
The Relative Strength Index (RSI) is approaching 30, indicating a potential oversold zone where a price bounce could be expected.
This situation suggests caution, as although the RSI points to a possible undervaluation of AVAX, confirmation of a trend reversal would be prudent before considering an entry. The current downtrend demands attention to possible continued selling or a shift to an uptrend if strong support is present.
Declining volume suggests less trading activity. The MACD has crossed to the downside, with the blue line below the orange line and the histogram moving towards negative values, which could anticipate a bearish signal.
However, the lack of a clear trend in the price and indicators suggests that the market is in a stage of indecision, waiting for possible new catalysts to define the direction.
The Decentralized Finance (DeFi) sector represents both opportunities and challenges.
Despite an increase in total value locked in (TVL), there has been a decline in overall activity within its DeFi offering. Attracting and retaining developers and users on their DeFi platform is an ongoing challenge in the face of more flexible competitors.
Incident management and communication with the community are critical to maintaining trust. Ava Labs’ ability to handle technical issues in a transparent and efficient manner will be critical to the future of AVAX.
Avalanche is at an important decision point. The ability to adapt and stay current will be essential to meet current and future challenges.
