A significant rise in the burn rate of Avalanche’s AVAX tokens was observed last week, signifying an accelerated pace of token elimination from the market. A total of approximately 31,650 AVAX have been burned in seven days, with the majority occurring on a single day, February 24.
Recent Stability Gives Way to Increase
Previously, the burn rate of AVAX had maintained a consistent daily average of 1,000 to 1,300 tokens. However, this recent spike accounts for over half of the tokens burned in the past month. The surge correlates with an increase in network transactions, suggesting that Avalanche may be destroying tokens equal to its transaction fee revenues.
The higher burn rate, typically seen as a bullish sign due to the reduction in supply, has oddly not translated to a price increase for AVAX. Despite the escalated token burn, futures open interest for AVAX has dipped by 18% in ten days, as per Coinglass.
Market Indicators and Price Outlook
The price of AVAX has not experienced an uplift, even with the long/short ratio not surpassing 1, hinting at a bearish sentiment among leveraged investors. Technical analysis points to the Relative Strength Index (RSI) facing resistance at the neutral 50 level and a potential bearish signal from the Moving Average Convergence Divergence (MACD) with its line below the signal line.
Despite these indicators, the possibility of a bullish trend remains if AVAX can break through the current resistance. As of last week, the ninth-largest cryptocurrency by market cap saw a price reduction of 8.46%, reflecting decreased speculative interest.
