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Avalanche price darted higher on Tuesday as investors reacted to the latest American inflation data. AVAX climbed to a high of $14.30, the highest level since December 5 of this year. It has climbed by more than 20% from its lowest level this year.
Avalanche DeFi TVL slips
Avalanche price staged a strong comeback on Tuesday after the US published the latest inflation data. These numbers provided hope that the Federal Reserve will go slow on interest rate hikes in the coming meetings.
Inflation eased from 7.7% in October to 7.1% in November. Core inflation, which excludes the volatile food and energy prices, dropped from 6.5% to 6.0%. Inflation has dropped in the past two months straight.
The next key catalyst for the Avalanche price will be the upcoming FOMC meeting. Economists expect that the Fed will increase interest rates by 0.50% on Wednesday. It has already hiked by 400 basis points in a bid to fight soaring inflation.
Sill, Avalanche’s ecosystem remains in trouble as crypto investors stay in the sidelines. A good way to look at this is to consider the volume tied in its DeFi ecosystem. According to DeFi Llama, the total value locked in Avalanche’s DeFi has collapsed to $1.8 billion from its all-time high of over $22 billion.
This decline has been led by Aave, Benqi, and Trader Joe, which have shed 24%, 2.7%, and 1.75% of value in the past 30 days. Others like Wonderland, GMX, Stargate, and Pangolin have actually done well in the same period.
Avalanche price prediction
The four-hour chart shows that the AVAX price has made a spectacular recovery in the past few hours. It has managed to move above the descending trendline shown in orange. The coin has also moved above the 25-day and 50-day moving averages while the MACD has drifted upwards.
Therefore, there are signs that the bear market is capitulating ahead of the upcoming Federal Reserve decision. If this happens, the next key level to watch will be at the psychological level of $15. A drop below the support at $12 will invalidate the bullish view.
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