Avalanche (AVAX) is facing increasing market pressure as key indicators show a steep decline in institutional interest and an alarming rise in bearish trading behavior. Over the past few weeks, the token has consistently formed lower highs, and recent data confirms that both whales and long traders are backing away from the asset.
With major investors reducing their exposure and long positions being rapidly liquidated, AVAX appears to be entering a vulnerable phase. The situation is now raising concerns about the potential for further downside in the days ahead.
One of the strongest warning signs for Avalanche comes from the behavior of large holders. On-chain data from analytics platform IntoTheBlock reveals that whale transactions have dropped off significantly.
Transactions valued between $1 million and $10 million are down by a staggering 95%, while those above $10 million have ceased entirely. Even mid-sized transactions in the $100,000 to $1 million range have plummeted by 65%.
This dramatic drop in activity suggests a broader retreat by deep-pocketed investors who may no longer see short-term value in holding AVAX. Their exit weakens overall market support and creates an environment where smaller traders are left to manage the volatility alone.
Since the start of May, AVAX has failed to break through key resistance levels, instead setting up a pattern of lower highs and struggling to hold onto support. At the time of writing, the token was trading near $20.28, having dropped over 3% in the last 24 hours.
This technical setup signals that bearish momentum is intensifying. Without a meaningful shift in volume or sentiment, AVAX may struggle to sustain even its current levels.
Adding to the concern is a notable 22% drop in 24-hour trading volume, which reflects waning trader interest and reduced liquidity—two factors that can make price swings more volatile and unpredictable.
As whale interest fades, trader sentiment has also turned increasingly negative. Data from derivatives analytics platform CoinGlass shows that short positions are heavily concentrated just above the current price range—particularly between $21.39 and $23.
These zones are likely to act as resistance should AVAX attempt a bounce. In the current market, such resistance levels are often defended aggressively by traders who stand to profit from further declines.
Meanwhile, leverage on long trades remains cautious. There is roughly $8.43 million in long open interest between $19.80 and $21.39, compared to $10.25 million in cumulative short liquidation leverage—suggesting more traders are betting on price weakness than recovery.
The market volatility has already caught many long traders off guard. In the past 24 hours alone, more than $290,000 in positions were liquidated, with $189,000 attributed to longs. This shows that bullish traders are under pressure and quickly losing ground.
Despite this, the Long/Short Ratio on Binance sits at 2.67, which may give the impression that most traders are optimistic. However, among top-performing traders, the ratio is much more conservative at 1.72—indicating that experienced participants are approaching AVAX with caution.
This gap between general sentiment and elite behavior suggests that the smart money is hedging or staying on the sidelines while the broader market remains at risk.
Beyond whale behavior and liquidation data, derivatives metrics are also reinforcing a negative outlook for AVAX. Total derivatives volume has dropped, and funding rates are moving into negative territory. In futures markets, this means that traders holding short positions are paying to keep their trades open—further evidence that bearish bets remain dominant.
When funding rates stay negative during a downturn, it often points to traders doubling down on short positions, anticipating continued losses. With little to suggest an immediate turnaround, this bearish bias could persist.
The $20 mark now stands as a crucial psychological and technical level for Avalanche. If the token fails to hold above this level, it could trigger additional selloffs, potentially dragging AVAX down toward the $18.50–$19.00 range. These lower zones represent prior support from March, and a retest could occur if bearish momentum remains unchecked.
On the flip side, a break above $21.50 would challenge the concentration of short positions and possibly trigger a wave of liquidations. However, for that to happen, AVAX would need a surge in spot buying volume and a change in market sentiment—neither of which appear imminent.
The broader crypto market is also showing signs of caution, with several altcoins facing similar downtrends. Investors are becoming more selective, and assets like Avalanche that lack strong catalysts or institutional backing are being hit harder.
As a result, AVAX may struggle to find its footing unless a new driver emerges—be it a partnership, network upgrade, or macro shift in crypto investment flows.
Avalanche is at a critical juncture. The sharp decline in whale activity, combined with rising short interest and long liquidations, paints a picture of a market that’s bracing for further losses. While a rebound is always possible in the volatile world of crypto, current indicators suggest the path of least resistance remains to the downside.
For traders and investors, caution is advised. Unless Avalanche can reclaim key resistance levels and attract renewed inflows, the asset may continue to drift lower in the near term.
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