The Avalanche price held steady on Wednesday even as other cryptocurrencies like Bitcoin pulled back. The AVAX token is trading at $96.30, which is a few points below the key resistance level at $100. This trend brings the total market cap of all AVAX in circulation to more than $21 billion.
Why is AVAX soaring?
The Avalanche price has done relatively well as investors reflect on its growing market share in the decentralized finance (DeFi) industry.
For starters, Avalanche is an Ethereum-killer that is best-known for its blazing speeds. This means that transactions in the network are processed at a rapid rate than those in other platforms.
For example, because of how it is built, Ethereum can only process less than 20 transactions per second. Solana, another popular platform, can only process about 2,000 transactions per second. On the other hand, Avalanche is able to do more than 4,500 transactions per second.
As a result, many developers are moving to the network in a bid to build fast applications that are also relatively faster. As a result, their users can spend less money to process payments in their apps.
Indeed, the ecosystem is growing. Data shows that there are now 65 applications built on Avalanche. These apps have managed to grow their total value locked (TVL) to more than $10 billion. This is remarkable growth considering that Avalanche was started just a few months ago.
For example, Deloitte is now using Avalanche’s platform to improve its disaster recovery solutions. Tether also recently launched in Avalanche.
Key challenges
However, Avalanche, like most Ethereum-killers are facing three major challenges. First, the industry is getting more competitive and more platforms have faster speeds. For example, Kadena can process about 480k transactions per second.
Second, Ethereum has a pole position in the industry. For example, its DeFi apps have a total value locked of more than $170 billion. Avalanche is trying to solve this challenge by paying developers to move to its platform through Avalanche Rush.
Finally, while Ethereum is slow and expensive, there are layer-2 apps that are seeking to optimize the network. For example, developers can easily move their apps to a layer 2 network like Polygon and see better speeds.
Avalanche price prediction
The four-hour chart shows that the AVAX price has been in a bullish trend lately. Precisely, it has risen by more than 84% from its lowest level since October. The coin remains slightly above the 25-day and 50-day moving averages.
However, a closer look shows that it has formed a rising wedge pattern that is shown in red. This is a similar pattern like the one Bitcoin had before the current crash. Therefore, while the overall trend is bullish, the price will likely have a small pullback soon.
