- Avalanche price jumped on the first trading day of the year.
- Volume has started rising after falling sharply in the final week of 2023.
- After the strong Santa rally, Avalanche could have the January Effect.
Avalanche (AVAX) price started the year well as the token started bouncing back. It jumped to a high of $42.500 on Tuesday morning as Bitcoin surged above $45,000. This price was much higher than last week’s low of $37.50.
January Effect takes place
Avalanche and other cryptocurrencies are bracing for what is known as the January Effect. This is a situation where financial assets start rising in January after retreating sharply in the final week of the year as the Santa Claus rally ended.
The January Effect happens as volume in the financial market starts rising after crashing in the last week of the year. Last week, most exchanges saw substantially weaker volumes as many large traders went for holiday.
The selling volume is also usually substantially higher than average in the last week of the year because of tax-loss harvesting. This is a situation where traders close underperforming assets to crystallize a loss than can be offset against capital gains elsewhere.
Therefore, the outlook for Avalanche token is modestly bullish in the coming days as investors come back. Besides, numerous catalysts could see it continue the uptrend.
First, the SEC has until January 10th to decide on the spot Bitcoin ETF. Most analysts believe that the agency will likely approve these funds this month. Besides, it has been engaging key players in the industry like Blackrock and Nasdaq in the past few months.
The other likely scenario is where the agency postpones the decision to a few more months as it reviews the safeguards set by these companies.
Second, there are signs that the Federal Reserve will start cutting rates this year, a positive move for the crypto industry. The most recent numbers revealed that inflation has continued falling in the past few months.
Further, the Avalanche ecosystem is doing well. For example, volume in Trader Joe has jumped while the Avalaunch token has surged by over 50% in the past 24 hours.
Avalanche price forecast
The AVAX token price pulled back in the final week of the year as traders took profits after a successful performance in 2023. This retreat saw it crash to a low of $37.55, its lowest point since December 18th. AVAX has risen above the 50-period moving average while the Relative Strength Index (RSI) has pointed upwards.
The Average Directional Index (ADX) has pointed downwards but remains above the key point at 20. Therefore, the outlook for the Avalanche price is bullish, with the next point to watch being the psychological level at $50.
