- A positive move on some on-chain metric does not necessarily indicate a bullish trend for AVAX.
- Whales and retailers are selling off their AVAX holdings quickly, but some hope remains.
The pricing trajectory for Avalanche [AVAX] has been sharply bearish, down 17.13% in the past week, and prospects for a recovery appear slim.
Despite some encouraging signs, such as a 53.73% increase in trading volume in the past 24 hours and an increase in the number of daily active users and large trades, AMBCrypto reports that these factors may not herald a reversal of the current trend.
The increased activity signals an exit of major bondholders
IntoTheBlock data reveals increased activity on AVAX, with the number of active addresses increasing from 38.58k to 45.69k in just 24 hours.
At the same time, the number of large transactions also grew, from 166 to 297 transactions within the same time frame.
Source: IntoTheBlock
Typically, such spikes can indicate a bullish trend, but the associated decline in AVAX’s price indicates otherwise.
This pattern of increased user engagement combined with a price drop points to profit-taking and distribution activity.
In simpler terms, it appears that whales, or large holders, are getting rid of their AVAX to cash in on gains, transferring their holdings to a broader group of smaller investors – a move that often signals a possible further price decline.
Further analysis by AMBCrypto confirms that this sell-off does not only affect whales, but also retailers.
Whales, retailers are losing confidence in AVAX
According to CoinglassAVAX’s Netflow on the major centralized exchanges was mostly positive, generally indicating a bearish outlook for the cryptocurrency.
A positive Netflow indicates that the volume of AVAX deposited on these exchanges is greater than the amount withdrawn, indicating that traders are more willing to sell rather than hold.
Source: Coinglass
This situation also means that a sharp increase in inflows will contribute to increased circulating supply on the exchanges, which will put further downward pressure on the price.
Bearish sentiment is also evident among retail traders, as evidenced by a negative Open Interest (OI) Weighted Funds rate.
Tits negative indicator reflects a pessimistic view of the futures and derivatives markets, with traders likely to close their positions in anticipation of further price declines or to minimize losses.
AMBCrypto’s analysis of technical indicators reveals persistent bearish patterns, but a possible recovery is approaching.
A glimmer of hope remains for AVAX
The Moving Average Convergence Divergence (MACD) indicator has intensified the bearish outlook for AVAX as the MACD line (blue) passing below the signal line (red) suggests an impending decline in momentum and price.
Source: trading view
This trend points to a possible decline in AVAX’s price in the short term. However, the presence of key technical patterns, such as local support and a descending trendline on the daily chart, indicates a possible bullish reversal ahead.
The recent selling pressure on AVAX could be price-seeking to test the local support zone at $20.23, a level historically associated with strong buying interest.
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Should this support persist, it could trigger a rally, pushing the price past the descending trendline towards a nearby target of $28.
Source: trading view
On the other hand, if bearish forces prevail, AVAX could fall to the first lower support at $17.29. Further pressure could then push the price down to $11.90.