Avalanche (AVAX) have raised significant concerns about its future price trajectory. Despite some positive on-chain metrics, a closer look at market behavior reveals a troubling pattern that could lead to a further drop, potentially hitting $11.

Market Activity Signals Trouble

Avalanche’s price has sharply declined by 17.13% over the past week, and the outlook remains bleak. Although there has been a notable 53.73% surge in trading volume and increases in daily active users and large transactions, these metrics alone might not be enough to reverse the current downward trend.

Data from Into The Block highlights a dramatic rise in AVAX activity, with active addresses increasing from 38,580 to 45,690 within a single day. Similarly, the number of large transactions grew from 166 to 297 in the same period. Such activity spikes typically indicate bullish sentiment, but the concurrent price drop suggests otherwise.

This surge in activity is primarily due to whales, or large holders, cashing out their AVAX. This redistribution of assets from major holders to smaller investors often signals a bearish outlook and potential further declines in price.

Whales and Retail Investors Exiting

According to Coin glass, the Net flow of AVAX on major exchanges has been predominantly positive, meaning more AVAX is being deposited than withdrawn. This trend typically signals a bearish market sentiment, as increased deposits suggest traders are opting to sell rather than hold their assets.

This situation also leads to an increased circulating supply on exchanges, which can drive prices lower. Retail traders are also exhibiting a lack of confidence, with a negative Open Interest (OI) Weighted Funds rate indicating a pessimistic outlook in the futures and derivatives markets. This trend suggests that traders are closing positions to minimize losses or in anticipation of further price declines.

Technical Indicators Present Mixed Signals

Technical analysis provides a mixed view of AVAX’s future. The Moving Average Convergence Divergence (MACD) indicator is showing a bearish signal. The Moving Average Convergence Divergence (MACD) line has crossed below the signal line, a pattern that typically forecasts a decline in momentum and price.

Despite these bearish indicators, there is a small ray of hope. Key technical patterns, such as local support levels and a descending trend line on the daily chart, suggest the possibility of a bullish reversal. The current sell pressure might be testing the local support zone at $20.23, a level historically associated with strong buying interest. If this support holds, AVAX could see a price rebound, potentially climbing to $28.

On the other hand, if bearish forces continue to dominate, AVAX might break below this support level. The next significant support is at $17.29, and if this fails to hold, the price could plummet to $11.90, signaling a more severe downturn.

Conclusion: What Lies Ahead for AVAX?

The recent sell-off in AVAX, driven by both whales and retail investors, paints a concerning picture for the crypto currency’s short-term future. While some technical indicators hint at a potential rebound, the overall market sentiment remains bearish. Investors should be cautious and closely monitor key support levels and market trends as they consider their next moves.