AVAX’s recent exit from its falling wedge consolidation pattern is already starting to lose momentum. In fact, altcoin prices recently fell 9%, indicating the first signs of bull exhaustion.
Additionally, at the time of writing, the token’s stochastic RSI had just bounced off an overbought zone, hinting at an exhaustion phase.
Source: TradingView
A step towards regional adoption
The timing is particularly interesting here, with AVAX’s recent price movement following the Avalanche Foundation’s announcement of the creation of a distributed ledger technology (DLT) foundation within the Abu Dhabi Global Market (ADGM).
According to the announcement, the initiative aims to improve transparency and accelerate the adoption of tokens in the Middle East. This will be a strategic move that could strengthen long-term demand for the Avalanche ecosystem.
Could growing adoption and buyer dominance cause a bullish reversal?
Therefore, the question now is whether growing adoption and strengthening buyer dominance could cause a bullish reversal.
With growing adoption and increasing buyer interest, AVAX could attempt another bullish recovery once the ongoing correction begins to subside. In fact, the altcoin’s Taker Cumulative Volume Delta data hints at a surge in buyer dominance over the past 2 weeks.
Source: CryptoQuant
Additionally, if momentum returns, the next significant reaction will likely occur near the wedge’s upper resistance level – an area that has historically triggered price reactions.
A look at contractual activity and TVL
AVAX’s on-chain data, however, appears to offer a somewhat mixed outlook.
Consider this: Avalanche ecosystem contract activity has increased significantly this month. The number of transactions on the ecosystem jumped by 0.2 million to 6.9 million in the last 24 hours alone, signaling increased network usage.
Source: Token Terminal
On the other hand, AVAX’s total value locked fell by 5%, despite its broader structural trend maintaining.
The decline in the token’s total locked value may be a sign of strategic disbursement by holders to generate the liquidity required for the next major move.
Source: DéfiLlama
What’s next for AVAX?
On the daily chart, the altcoin’s structure has been bullish, with the corner’s resistance being a key reference point for the next trajectory of price action. The liquidity group around the $13 level could be the next target.
Finally, projected long-term gains on the adoption and activity fronts could portend a potential upcoming reversal at the wedge support level.
Final Thoughts
- Avalanche’s ADGM-based DLT Foundation could accelerate token adoption in the Middle East.
- Despite renewed buyer interest, AVAX’s recovery still depends on demand returning to key technical levels.
