As predicted in CCN’s Feb. 12 analysis, the price of Avalanche (AVAX) is nearing a drop below $20. This plunge is part of a broader market crash, with prices hitting multi-month lows.
Amid rising panic selling, AVAX has entered the oversold zone. The token is also struggling to find support following increased concerns of further declines as market confidence wanes. Here’s what might lie ahead for AVAX.
AVAX Faces Key Test Amid Market Panic
Since testing the $34.40 resistance on Feb. 1, AVAX has struggled to maintain gains. This price action is likely tied to increasing selling pressure.
Likewise, the crypto fear and greed index also appears to have impacted this decline
The index ranges from 0 to 100. Values below 25 signal extreme fear, while above 75 indicate extreme greed. Sentiment between 25 and 75 reflects fear, neutrality, and greed.
As of this writing, crypto sentiment has dropped to 25, which is an extreme fear territory.
Historically, two things can occur when the crypto fear and index reach this point. First, it could imply a good buying opportunity if demand for the asset involved rises.
Conversely, it could signal a potential crash if selling pressure escalates. In AVAX, the data suggests the latter, as there’s no indication of buying the dip.
Bears Keep Up the Pressure
Furthermore, the technical perspective aligns with this thesis. For example, the Relative Strength Index (RSI) has dropped near the oversold region on the daily chart.
Typically, this should lead to a bullish reversal. However, that might not happen as the Bull Bear Power (BBP) shows a negative reading.
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This negative reading indicates bearish dominance. However, if sustained, AVAX’s price might undergo an extended correction, especially as it has yet to rise above the descending trendline, as shown above.
AVAX Price Nears Sell Wall
Like the technical outlook, the on-chain data obtained from IntoTheBlock supports another potential fall. According to the In/Out of Money Around Price (IOMAP), AVAX’S price faces a major resistance at $23.60.
About 128,000 addresses purchased 3.31 million AVAX at this price and currently have unrealized losses. The IOMAP can spot support and resistance using the volume in profits or losses.
A higher volume of tokens in profits indicates support. However, a higher volume of tokens in losses represents resistance.
Since it is the latter, it indicates that AVAX’s price could experience a setback. If that happens, then the cryptocurrency could drop to $17.52.
However, if demand for AVAX surges and the volume is more than 3 million, the token might breach $23.60.
AVAX could reclaim the $30 mark in that scenario and probably trade higher.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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