The AVAX cryptocurrency has witnessed a substantial uptick in its token burn rate, as recent data from Avascan indicates a removal of roughly 31,650 AVAX from circulation over the past week. The majority of these tokens were eliminated on February 24, marking a significant shift from the previously stable daily burn rates of 1,000 to 1,300 tokens. This activity suggests a tightening of supply which, under typical circumstances, could be seen as a positive signal for the cryptocurrency’s value.
Connection Between Network Activity and Token Burns
The surge in AVAX’s burn rate mirrors an increase in network transactions, hinting at a possible policy of burning all transaction fee revenues. This link between network activity and burn rates implies that heightened network usage could lead to more tokens being burned, thereby potentially boosting the coin’s value. Despite this, the past week’s token burn has not yet resulted in appreciable price gains for AVAX. In contrast, there has been an 18% drop in the open interest for AVAX futures over the past ten days, based on Coinglass data.
Technical Analysis and Market Sentiment
Technical analysis shows a lackluster performance in the AVAX long/short ratio, which has not exceeded 1, indicating the predominance of bearish sentiment among leveraged investors. The AVAX price’s next movements may hinge on its ability to breach the neutral mark on the Relative Strength Index (RSI), which until now has served as resistance. Moreover, the Moving Average Convergence Divergence (MACD) indicator suggests a potential for a bullish trend if a crossover occurs.
Despite these potential positive technical indicators, the AVAX token has suffered a loss of 8.46% over the last week. This recent decline may dampen speculative interest and affect the overall market sentiment toward the ninth-largest cryptocurrency by market capitalization.