Markets
Will Avalanche’s $30 support trigger major market moves?
In today’s analysis, we will delve deeper into the recent price action of Avalanche (AVAX) and its on-chain activity to understand underlying trends and potential future movements.
Bitcoin’s 22% correction from all-time highs has led to AVAX trading near the critical $30 support level, instilling fear among holders. Curious to know the reasons behind this behavior? Let’s examine the details.
AVAX is trading just above a critical support level
The chart below shows Avalanche’s price action over a 4-hour period. The red lines highlight key support and resistance levels. Currently the price is around $32. A drop below the $30 range could trigger a cascade of liquidations, leading to further price depreciation.
The $30.74 level, close to the $30 handle, aligns with the 0.618 Fibonacci line and is crucial support. Monitoring these levels will help investors and traders anticipate potential price movements.
Key resistance levels to watch are $33.26 (200 EMA), $34.06 (100 EMA), and $39.78. The 100 and 200 EMA on the 4-hour timeframe are significant as they can act as trendline resistance in the downtrend.
AVAX/USDT Price Action (4 Hours). Source: TradingView
Furthermore, the Ichimoku cloud is currently in a critical resistance zone. If AVAX breaks above the cloud, it could signal a price recovery.
Avalanche Analytics: Exploring essential on-chain metrics
Avalanche’s average holding time has dropped to levels seen during the fourth-quarter bear market of 2022. This suggests that investors are holding their coins for shorter periods, indicating increased trading activity and reduced confidence in holding AVAX at long term.
As the holding time decreases, it shows that more investors are trading AVAX rather than holding it. This increased activity can lead to an increase volatility and price fluctuations.
The decrease in holding time reflects bearish market sentiment. Investors are less confident in AVAX’s long-term potential and are choosing to open and close positions more frequently.
At the time of writing, more than 2 million small AVAX holders are at breakeven or at a loss. This situation could increase selling pressure as these investors may decide to sell to cut losses, causing the price to fall further.
Most addresses contain between 0 – 1 AVAX and 1 – 10 AVAX, indicating a large number of small holders. The stability of the largest holdings suggests that major investors are maintaining their positions.
Many small holders breaking even or at a loss reflect cautious market sentiment. These holders are more likely to sell under pressure, which could lead to greater volatility and further price declines.
The number of addresses holding AVAX for less than a month has dropped significantly. This means that holders who purchased AVAX recently are exiting the market and cutting their losses.
While fewer short-term traders can reduce immediate price volatility, it also means there is less buying support from this group. This can make the price more susceptible to downward pressure from other market segments.
Strategic recommendations amid Bitcoin’s influence
- Outlook bearish to neutral: AVAX price struggles below the $30 support level, showing weakness after Bitcoin corrected from all-time highs. This has sparked fear among holders, with short-term investors abandoning to cut losses.
- The influence of Bitcoin: If Bitcoin continues its bullish momentum and approaches all-time highs, this could have a positive impact on the price of AVAX.
- Conditional support: If Bitcoin were to decline further, AVAX could experience a significant price decline in the medium term, potentially falling below the critical $30 support level.
- Price projections and recommendations: In a bearish scenario, AVAX could fall to $25 if the price of Bitcoin falls. To reduce risk exposure, traders should wait for the price to drop below $30 before buying. The ideal buying range would be around $25-$27 for an optimal entry position. Setting a stop the leak at $24 it is advisable to manage potential downside risks and aim for a selling price of $40-50 to capitalize on the next upward wave.
Disclaimer
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