- Avalanche (AVAX) is experiencing a sharp decline, with a 17.13% drop in the past week and increased sell-offs by whales and retail traders suggesting further bearish momentum.
- Despite some positive technical indicators, such as rising trading volumes and active addresses, AVAX may face a potential drop to $11 if the bearish trend continues.
Avalanche (AVAX) has been grappling with a significant bearish trend, with its price dropping by 17.13% over the past week. Despite some optimistic signs, such as a 53.73% increase in trading volume and a rise in daily active users, these factors may not be enough to reverse the current downtrend.
Whale Activity and Market Sentiment
Recent data reveals a surge in activity on the Avalanche network. IntoTheBlock reports a rise in the number of active addresses from 38.58k to 45.69k and an increase in large transactions from 166 to 297 within just 24 hours. While such spikes often suggest a bullish trend, the accompanying price decline suggests otherwise.
This increased activity appears to be driven by whales and large holders exiting their positions. The pattern of heightened user engagement alongside a falling price indicates that major holders are offloading their AVAX to realize profits. This shift is leading to a broader distribution of AVAX among smaller investors, often a precursor to further price declines.
Retail Traders Also Losing Confidence
The bearish sentiment extends beyond whales to retail traders. Data from Coinglass shows a positive Netflow of AVAX on major centralized exchanges, signaling a bearish outlook. This positive Netflow implies that more AVAX is being deposited on exchanges than withdrawn, reflecting traders’ increased willingness to sell rather than hold.
Additionally, a negative Open Interest (OI) Weighted Funds rate highlights a pessimistic outlook in the futures and derivatives markets. Traders are closing their positions, likely anticipating further price drops or aiming to minimize losses.
A Glimmer of Hope Amidst the Downtrend
Despite the prevailing bearish sentiment, there remains a glimmer of hope for AVAX. The Moving Average Convergence Divergence (MACD) indicator reveals an intensifying bearish outlook, with the MACD line crossing below the signal line, suggesting a potential decline in momentum and price. However, technical patterns such as local support levels and a descending trend line on the daily chart hint at a possible bullish reversal.
Currently, AVAX’s price is approaching its local support zone at $20.23, a level historically associated with strong buying interest. If this support holds, it could provide a buffer against further declines. However, if the bearish trend continues, a drop to as low as $11 may be on the horizon.
While AVAX faces significant bearish pressures with increased sell-offs by both whales and retail traders, technical indicators and support levels could offer some hope for a potential rebound.