Avalanche (AVAX) has just gone through a fairly calm month with prices hovering around $24.42, with almost no significant fluctuations recorded. However, in the past 24 hours, this coin has surged more than 2%.
In the context of a three-month frame, AVAX has delivered a return of about 12%. However, since the beginning of the year, the increase has only stopped at 5.7% – quite modest compared to many competitors in the cryptocurrency market.
The positive point is that the outlook is gradually brightening. DeFi activity on Avalanche shows signs of acceleration, promising to bring demand on the spot market. If this trend continues, AVAX could completely break out to the $31.07 region, corresponding to an increase of about 27% compared to the current level.
The momentum from DeFi could push AVAX's price higher
DeFi activity on Avalanche is showing a clear explosion, despite AVAX's price being 'pinned' around the $24 mark for many weeks.
In just 7 days, the stablecoin supply on the network has increased by 14%, with USDC alone soaring 31% in one month. Abundant liquidity has led to more vibrant decentralized exchanges, with Avalanche's DEX trading volume doubling in just three months.
Notably, in the last 24 hours, the inflow of stablecoins into Avalanche even surpassed Solana – which is considered the chain often leading in this metric. At the same time, the number of daily transactions also surged, increasing nearly 5 times compared to the previous month, indicating that traders are not turning away. They are choosing to hold stablecoins, taking advantage of opportunities in the DeFi ecosystem and preparing for the next strategic moves.
"Stablecoin supply increased by 14% (1 week). USDC supply increased by 31% (1 month). Trading volume on DEX increased 2.5 times (3 months). Stablecoin inflow (24 hours) > Solana. Daily trading increased 5 times (1 month)"
In previous cycles, DeFi explosions often served as an early signal of increased demand for native tokens. With Avalanche, this is even more important as users must pay fees in AVAX and also need to hold AVAX to participate in pools and yield farming. When activity picks up again, the demand for AVAX also tends to rise – a factor that leads more and more traders to start mentioning the potential for a price breakout.
The price chart of AVAX signals a move towards $31.07
On the daily frame, AVAX is forming a rising triangle pattern, with successive higher lows converging into a horizontal resistance zone.
Each correction is quickly absorbed at higher price levels, reflecting consistent and enduring demand. Traders often combine the triangle pattern with the Fibonacci level, and if measured from the most recent oscillation, the first target could be aimed towards the $31.07 region – which is about 27% higher than the current $24.42.
A breakout to this level would not be surprising if the bulls continue to maintain their proactive stance. However, to solidify the bullish scenario, AVAX needs to overcome several key barriers:
First, the price must close above the resistance line of the triangle – an area that this coin has touched multiple times in recent weeks. Only a solid close above will confirm that the bulls have really alleviated the selling pressure.
Conversely, if the price slips below the most recent low, the bullish signal will weaken. In particular, a close deep below the triangle bottom or the $22.15 mark could cause the entire scenario to be 'reset', significantly delaying the breakout prospects.
Why might the upward momentum need more time?
One noteworthy point is that the derivatives market is entering a state of stagnation. Open contracts have shrunk from $962.8 million on August 24 to $823.7 million on August 27, reflecting that leverage in the market is gradually decreasing.
When leverage diminishes, the possibility of breakouts still exists, but the pace is often slower and rarely creates strong 'squeeze' candles. This makes the spot market the main driving force for price volatility.
In the context of a vibrant DeFi landscape, the need for spot trading shows signs of improvement, but more time is still needed to break through the resistance zone that has been tested multiple times.
Another supporting factor is that the 'bull-bear power' indicator has just shifted to a positive state, indicating that the bulls have been dominant in many recent sessions. This signal reinforces the rising triangle pattern, but serves as a supportive role rather than an independent triggering factor. Therefore, if open contracts continue to decline, even if the balance tips in favor of the bulls, AVAX's price will still struggle to create an immediate breakout.
Summary
DeFi activity on Avalanche is showing signs of explosion, creating a solid foundation for the price increase of AVAX. On the technical chart, a rising triangle pattern has formed with a Fibonacci target at $31.07.
Notably, open contracts in the derivatives market are cooling off, indicating that the main momentum currently comes from spot trading. If AVAX can close above the resistance zone, the door to advance to $31.07 will be wide open. If leverage returns, the upward momentum could be strong and faster; conversely, if there is a lack of push from derivatives, the upward trend will still persist but will evolve more slowly and with more volatility.
