Key Insights:
- AVAX price delivered surprising upside for a retest of last week’s highs.
- A look at the key driving forces behind AVAX demand, including growing network activity.
- Institutional involvement in Avalanche intensifies courtesy of its focus on digital assets treasury.
AVAX price secured a place among the top coins that have kicked off the week with healthy upside. But can it maintain the bullish bias even as the market sentiment shifts into fear territory?
AVAX price pushed as high as $35.76 on Tuesday morning. This move also meant it retested its previous weekly top. This bullish bias was even more impressive considering that it recovered by about 20% from its lowest price point on Monday.
According to CoinGlass, the recovery in the last 24 hours was fueled by a spike in positive daily spot netflows by about $8 million. While the recovery signaled that investors were unwilling to sell, it highlighted a potential liquidation shakedown.
Interestingly, roughly $2.8 million worth of short positions were liquidated in the last 24 hours. However, this was only a fraction of the $9.2 million worth of longs liquidated on Monday as price pivoted sharply. This marked the highest single-day liquidation event observed in AVAX price in months.
Why AVAX Price Rallied
AVAX price rally reflected its surging dominance. For perspective, AVAX dominance hovered as low as 0.26% at the start of September. It has since jumped to 0.38% at the time of observation.
The dominance spike was indicative of the accelerating liquidity rotation across the crypto market. Investors have been exploring coins with more upside potential further down the crypto market cap ranks.
On-chain data revealed that Avalanche DEX volumes have been rising over the last few months. The network’s weekly DEX volume surged to $4.2 billion, which was the highest level in 3 years.
Rising Avalanche DEX volume confirmed that the network has also been benefiting from organic network growth. This also contributed to the surge in organic demand for the AVAX native coin.
While Avalanche’s DEX volume pushed to multi-year highs, it was worth noting that this latest surge was reminiscent of its 2021 performance.
Avalanche Institutional Demand and Activity Fuel Confidence
Unsurprisingly, one of the best ways that blockchains have been attracting institutional activity was through healthy alignment with current cycle narratives. It turns out that Avalanche has been in tune with the real-world assets (RWAs) narrative.
Skybridge Capital founder Anthony Scaramucci recently revealed that his company will create a digital asset treasury for Avalanche. He also noted that multiple other companies were investing in Avalanche for tokenized funds creation.
The reveal confirmed that Avalanche was making strides in the RWAs segment, while also experiencing demand and utility from the institutional cohort. In other words, the Avalanche network has been meeting the criteria for liquidity rotation, which includes institutional activity, robust organic demand, and growing confidence in the market.
The big question is whether this latest bullish wave was just the beginning for AVAX. Scaramucci’s investment in Avalanche underscored expectations that the network may be headed for a robust growth phase.
It was also worth noting that AVAX was still heavily discounted by about 65% from its historic top, at the time of observation. The Avalanche potential recovery upside may support the idea that it could still be undervalued regardless of its latest upside.