Crypto market correlation and Valkyrie’s Avalanche fund launch also helped push AVAX to a weekly high.
Avalanche (AVAX) has rebounded strongly five days after testing a key inflection area as its support. Now, the AVAX/USD pair faces the possibility of continuing its upside retracement move further into Q2.
A 30%-plus move ahead?
AVAX’s price surged to almost $69.50 on May 5 from nearly $55 on April 30, a 25% jump.
Interestingly, AVAX’s rebound move surfaced inside the same support area ($54–$60 range) that had preceded a 100% and a 175% price rally in the January 2022–April 2022 and the October 2021–November 2021 session, respectively.
Additionally, the lower trendline of the AVAX’s prevailing descending channel pattern (possibly a “bull flag”) served as support. That raised the Avalanche token’s potential to extend its rebound move towards the channel’s upper trendline near $90, up almost 35% from May 5’s price.
Valkyrie launches AVAX fund
AVAX’s price rally also coincided with similar upside moves elsewhere in the crypto market, partially due to Federal Reserve’s announcement on May 4 to hike interest rates by 0.5% against the widely-anticipated 0.75%.
AVAX is up by about 20% when measured from its May 4’s lows near $59. Interestingly, its gains turned out to be higher than its top rivaling assets, including Bitcoin (BTC), Ethereum (ETH) and Polkadot (DOT). That could be due to Valkyrie.
The Tennessee-based crypto investment firm announced on May 4 that it is launching an Avalanche Trust (VAVAX) for accredited investors. It set the minimum investment at $25,000 and, according to sources, has already attracted $25 million to its vaults.
— Valkyrie (@ValkyrieFunds) May 4, 2022
The launch comes after Avalanche saw uptrends in key metrics, including usage and revenue generation.
In detail, the network’s average daily transactions nearly doubled in Q1/2022 (+82.8%) compared to the previous quarter, while its total income grew by 72.7% in the same timeframe, reports Messari researcher James Trautman.
The analyst further highlighted that Avalanche’s revenue growth could put “upward pressures” on AVAX’s market value, given its proof-of-stake network burns 100% of fees (derived in AVAX), and thus lowers the total supply in circulation.
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“This drives value to all token holders through increased scarcity rather than compounding the balances of validators and delegators,” Trautman wrote, adding:
“The question is just how statistically significant the spread between revenue and market value is […] As fundamental value (as opposed to speculative value) becomes a more substantial part of market value, a strong correlation between revenue and market value should theoretically exist.”
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