Avalanche Price Analysis: This $700M Signal Could Drive AVAX Below $20
thecryptobasic.com 01 August 2024 16:55, UTC Avalanche price fell below $25 on Thursday, Aug 1, having experienced a 25% downtrend in the last 10 days of July; on-chain analysis shows traders un-staking their coins, a move that could further weaken AVAX’s short-term recovery prospects.
Avalanche Suffers 25% Amid Growing Market Volatility.
Avalanche (AVAX) has struggled for traction this week as the crypto market experienced heightened volatility. Trump’s speech at the Bitcoin Nashville Conference generated media interest at the start of the week. Ethereum ETFs added fresh liquidity, while the Fed Rate pause on Wednesday, July 31, also generated an intense market reaction.
However, market data shows that investors lean disproportionately towards certain coins and sectors than others. And currently, Avalanche appears to be among those currently holding the short end of the stick.
Looking at the chart above, we see that AVAX is trading at the $25.30 level at the time of publication on July 31. Zooming out, the Avalanche price downtrend has now persisted for a second consecutive week. The chart above shows the AVAX is now 25% lower than its 30-day time frame peak of $33 recorded on July 21.
Investors Have Un-staked 28M AVAX in 10-Days
Curiously, Avalanche has recorded 25% losses during a period of a fairly bullish market trend where XRP, BCH, and BTC have all scored double-digit gains.
This rare market dynamic suggests the presence of internal bearish catalysts active within the AVAX ecosystem and nullifying the positive impact of the positive market sentiment.
Digging deeper, on-chain data shows a worrying bearish trend among Avalanche node validators’ core investors. The chart below represents real-time changes in the number of AVAX coins deposited in Avalanche protocol staking contracts. This provides clear insights into short-term sentiment among long-term investors.
As of July 21, Avalanche node validators held a total of 269 million AVAX in various staking contracts, according to the data compiled by StakingRewards.com. However, once Ethereum ETFs launched, that trend flipped, with Avalanche staking deposits and entering a declining trend over the last ten days.
At the time of writing on Aug 1, Avalanche investors hold less than 242 million AVAX in staking deposits. Effectively, this shows that Avalanche investors have un-staked over 28 million worth of AVAX coins valued at $700M in the last 10 days alone.
Typically, a persistent un-staking trend among node validators triggers a bearish reaction for two major reasons. Firstly, when previously staked coins are brought into circulation, the short-term AVAX market supply is diluted.
More so, it sends a signal that the majority of long-term investors and stakeholders currently have a negative outlook on AVAX’s short-term prospects. This could then discourage prospective investors looking to enter the AVAX/USD markets at the current lows.
Avalanche Price Forecast: AVAX Could Slide Below $20
The Avalanche (AVAX) daily chart indicates a bearish trend, with the price declining by 24.78% over the past 11 days. This downtrend suggests weakening momentum, and with the current price hovering around $25.26, the key support level at $25 is at risk of being breached. A break below this level could accelerate the decline towards the $20 mark.
The Bollinger Bands (BB) are widening, showing increased volatility. The upper band at $31.59 and the lower band at $24.22 create a significant range for price movement. The price is currently below the middle band, reinforcing the bearish outlook. If the price fails to recover above the middle band at $27.91, the likelihood of further downside increases.
The Commodity Channel Index (CCI) is at -134.69, indicating that AVAX is in oversold territory. This suggests that while there may be potential for a short-term bounce, the overall trend remains bearish. The CCI’s position well below -100 typically signals strong selling pressure, and unless there is a substantial recovery, the downward trend is likely to persist.
In summary, Avalanche’s decoupling from the broader market trade can be attributed to the newly-unstaked coins entering circulation and AVAX demand decline since the Ethereum ETFs launch.
If both scenarios persist, Avalanche will likely experience further downswings toward the $20 level in the days ahead. However, with the $25 support now at risk, technical indicators on the AVAX daily chart also affirm this bearish forecast.
