Avalanche to add the USP stablecoin to the list of offers. The battle between AVAX bulls and bears intensifies as selling pressure threatens to wipe out recent gains.
The crypto market has just concluded an interesting week marked by an extension of the bullish momentum seen at the beginning of this year. Avalanche has only made things more fun after a big announcement revealing that it will be hosting a new stablecoin.
Avalanche has officially confirmed that it will support the Platypus DeFi stablecoin USP. The latter previously confirmed that the stablecoin will be in Avalanche’s main pool, which will play an important role in USP’s stability. In addition, the collateral mechanism will use other stablecoins.
🧐 How does the Adaptive Peg Stabilizer implementation maintain the $USP to $1 peg? Let’s find out in this thread!
— Platypus 🔺 (🦆+🦦+🦫) (@Platypusdefi) December 22, 2022
Even more interesting is the stablecoin’s potential impact on demand for Avalanche’s native cryptocurrency AVAX. The stablecoin rollout will enable more usability for the Avalanche network. A move that is likely to fuel more demand for AVAX. The timing of the announcement is also worth noting, especially due to AVAX’s latest price action.
AVAX bulls struggle with the 200-day moving average
AVAX has just concluded a strong run-up for the second week in a row. It managed to gain as much as 74% from its January low of $10. However, it retreated to a press time of $17.05, with selling pressure manifesting itself after briefly breaching its 200-day moving average .
While the 200-day MA may have served as a psychological sell zone, it’s not the only indication of a potential pivot. The price also happens to be in overbought territory, where many investors are likely to start taking profits.
Should we expect a major drop?
A strong sell-off is at stake as AVAX holders, especially whales, begin to unload heavily. This would trigger a bearish cascade that would likely result in a significant retracement.
Perhaps some of Avalanche’s stats can help paint a better picture of the possible outcome. For example, between January 11 and January 13, it just experienced a large increase in volume.
This was the biggest increase in the past four weeks, but volumes have now declined. The volume increase was preceded by an increase in the weighted sentiment metric. The latter reflects the massive liquidity inflow that entered AVAX.
Realistic or not, here is AVAX’s market cap in terms of BTC
The same weighted sentiment metric is down, indicating another sudden sentiment shift in the bears’ favor. All the time, AVAX’s volatility had also risen as well as its market cap reflecting its strong accumulation.
AVAX’s market cap dipped slightly from its recent peak before recovering. This is a sign that there was some selling pressure at the top.
The volume increase mentioned earlier may be due to investor FOMOing, creating enough liquidity to protect AVAX from further price declines. Whether the same will hold true depends on whether the bulls can fend off the bears.
This post Avalanche [AVAX] confirms plans to host a new stablecoin called USP
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