The bullish setup emerges as traders raise their upside bets in smart contract protocols that rival Ethereum.
Avalanche (AVAX) looks poised to hit $80 as per a classic technical pattern after hitting a new high of over $65 on Sept. 12.
Dubbed as "Bull Flag," the structure emerges as a brief sideways/downward trend following a strong price move higher. As a result, Bull Flags tend to look like downward sloping channels, represented by two parallel trendlines that trap the price action.
Additionally, the market's underlying trade volume dries up as the prices move lower, indicating weakness in the downtrend. Therefore, Bulls Flags typically resolve following a break above their upper trendlines, with prices pushing as high as the previous uptrend's height, i.e. Flagpole.
AVAX's price action since Aug. 17 has apprehensively led to the creation of a Bull Flag pattern.
The chart above shows the structure's fruition, right from the $37-long uptrend (Flagpole) to a downward sloping channel's formation to an upside breakout. As a result, AVAX price now looks to be targetting $80.
That is primarily because of Bull Flags' popular profit targets; analysts look for the price to break higher with length equal to the flagpole's size. Therefore, measuring from the breakout level ($45.64), the AVAX profit target comes to be at around $82.
The setup appears as the Avalanche token reaches another record price level, hitting $66.47 for the first time in history, following a 618% rebound rally from its July 20 low of $9.25. Meanwhile, on a year-to-date (YTD) timeframe, its gains are an astonishing 1,988%.
DeFi and NFT boom behind soaring AV
The rally in Avalanche markets closely followed similar moves across smart contracts tokens that rival Ethereum, the leading public ledger behind the booming decentralized finance (DeFi) and nonfungible token (NFT) space.
But Ethereum's reign as a top smart contracts protocol has come under doubt due to its expensive transaction costs and network congestion issues. As a result, the market has made space for the so-called "Ethereum killers" like Solana (SOL), Cardano (ADA), Fantom (FTM), Avalanche, and others.
For instance, the total value locked (TVL) inside the Solana ecosystem has jumped by 165% in the previous seven days, as per data reported by DeFi Llama, while SOL/USD in the same timeframe has jumped by over 42%.
Similarly, Fantom's TVL has soared 12.73%, with FTM/USD exchange rates rising by 39% in the last seven days. As for Avalanche, the TVL has spiked 0.5% and AVAX/USD has risen by 41.10%.
In contrast, Ethereum's TVL has declined by 22.69%, signaling liquidity migration to rivaling chains.
AVAX/USD started rallying, particularly after the Avalanche Foundation launched a namesake DeFi incentive program on Aug. 18. The organization allocated $180 million to DeFi protocols that want to migrate from Ethereum chains to Avalanche one.
Related: Avalanche Rush to give out more than 180M in DeFi incentives
Benqi, a decentralized non-custodial liquidity market protocol built atop Avalanche, received $3 million from the foundation's grant.
Avalanche also witnessed growth in the NFT and DeFi projects looking to run atop its public ledger. That included a partnership Topps, a collectible and trading card maker that employed the Avalanche blockchain to launch its “2021 Topps Major League Baseball Inception NFT Collection.”
Nonetheless, Ethereum remains the dominant force in the smart contracts space. The project is undergoing major network upgrades to resolve its scalability and network fees issues, i.e. by updating its core proof-of-work protocol to proof-of-stake completely by next year.
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