Avalanche unlocks more liquidity through Bitcoin, but what’s next

AVAX is finally showing a sign of recovery after breaking through its short-term support and nearly retesting the June low. A new Avalanche announcement could bolster its potential by providing more access to Bitcoin in the network.

Avalanche recently announced that users can now plug Bitcoin into the network through the Core app. Access to Bitcoin, as well as its utility in the Avalanche ecosystem, was previously limited, particularly due to low DeFi activity and a lack of smart contracts.

Bridge Bitcoin to Avalanche using @coreappand unlock the possibilities with your BTC in the Avalanche DeFi ecosystem ✅

— Avalanche 🔺 (@avalancheavax) 17 October 2022

Unlocks more liquidity for Avalanche

One of the main benefits of the new bridge is that it will usher in more liquidity in the form of Bitcoin. This means that Avalanche could have more utility if it overcomes the previous limitations.

Higher liquidity means more utility which in turn can trigger higher velocity and volatility for AVAX. These features are quite useful for AVAX traders and investors.

Unfortunately, AVAX volatility has been on a downward trend for the past four weeks. This made it less attractive to traders, hence a drop in volume.

An increase in more liquidity and network usage could increase AVAX’s volatility in the long term. As for the short-term outlook, AVAX may be at the start of a bullish relief.

Trends

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The news of the new bridge enabling BTC transfer to the Avalanche network could boost investor sentiment and trigger more upside.

Both weighted sentiment and social dominance have experienced significant increases in the last 48 hours. This activity may be associated with the Bitcoin bridging news, and if so, the market reacted positively.

AVAX was trading at $16.10 at press time, which was nearly 11% upside from last week’s low.

AVAX’s pivot occurred after retesting June’s support levels, although it managed to reverse well above the 2022 low. The price jump also occurred just before dipping into the RSI’s oversold territory.

The bullish rejection of the 5-month support level confirms that investors have bought back into the same zone. Unfortunately, this also means that investors are buying back near the supposed bottom. However, it is still too early to tell whether AVAX is about to deliver a strong bullish near-term performance.

The crypto market has rallied significantly since the beginning of this week, and AVAX is among the coins that have seen some upside. The overall market conditions have an impact on the company’s ability to deliver sustainable extraction.

This article first appeared on AMBCrypto

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