Avalanche’s native cryptocurrency, AVAX, has recently exhibited a substantial increase in its token burn rate. In the span of the past week, data reveals that nearly 31,650 AVAX tokens were incinerated, with over half destroyed on a single day, February 24. This surge represents a stark contrast to the previously stable daily burn rate and accounts for a significant portion of the total tokens burned in the past month.
Network Activity Boosts Burn Rate
The Avalanche network has seen a parallel rise in transaction volume, suggesting a correlation between increased network usage and the elevated burn rate. This implies that more transactions on the Avalanche network could lead to higher fee generation, which in turn results in more AVAX being burned. Despite the potential bullish implications of reduced token supply, the price of AVAX did not increase in response to the heightened burn rate. In fact, interest in AVAX futures contracts dropped by 18% recently.
Analysts Eye Potential AVAX Market Trends
The current market sentiment towards AVAX appears bearish, as the long/short ratio has remained below 1, suggesting a prevalence of bearish leveraged positions. Technical analysis shows that the AVAX’s Relative Strength Index struggled to breach the midpoint and retreated, a move that typically indicates market hesitation. Nonetheless, surpassing this level could signal a positive trend reversal ahead.
In conjunction with the RSI, the Moving Average Convergence Divergence (MACD) also hinted at a possible reversal, with experts noting that a bullish crossover might lead to an upward trajectory for AVAX. Despite these technical indicators, AVAX recently suffered a price decline of over 8%, dampening speculative interest in the cryptocurrency.