Avalanche (AVAX) has been displaying resilience on its price charts, rebounding from a crucial support level around $31. This bounce has ignite optimism among investors, suggesting a potential bullish breakout in the near term. With AVAX’s price currently at $32.37, up by 3.78% in the last 24 hours, the altcoin appears to be gearing up for an extended rally. Let’s dive into the technical and on-chain metrics to understand the driving forces behind AVAX’s current market performance.

AVAX Holds Key Support Level: A Sign of Bullish Momentum?

AVAX’s recent price action has been characterized by a period of consolidation, which saw the asset trading sideways near the $31 mark. This consolidation phase indicated that the previous selling pressure has been absorbed, setting the stage for a potential breakout. The subsequent bounce to $32.37 shows that buying interest has picked up, with investors gaining confidence in the altcoin’s ability to rally further.

On-Chain Metrics Point to a Strong Bullish Case

Several on-chain metrics are backing up the bullish outlook for AVAX, suggesting that the rally may have more room to run.

1. Profitability of Holders: Data from IntoTheBlock indicates that around 58% of AVAX holders are currently in profit at the asset’s prevailing price. This high level of profitability is a positive sign, as it shows that a significant portion of investors is in a strong position, potentially limiting immediate selling pressure. It also suggests a solid base for further upward movement, as confident holders are less likely to sell off their positions at current levels.
2. Rising Social Volume: Social sentiment plays a critical role in the price movements of cryptocurrencies. According to Santiment, there has been a noticeable surge in AVAX’s social volume since the start of November. This increase in social mentions indicates heightened interest in the altcoin, which often correlates with bullish price action. The growing chatter around AVAX could attract more investors, further boosting the buying momentum.
3. Bullish Liquidation Data: Coinglass’s liquidation data provides another bullish indicator for AVAX. The data shows clusters of buy-side liquidation pools above the retested support level of $31. This pattern suggests that there are critical thresholds for potential buy-side liquidations, which could fuel an upward trend if triggered. The presence of these liquidation pools indicates that traders are positioning themselves for a price increase, further supporting the bullish outlook.

Technical Indicators Suggest Potential Upside

From a technical analysis perspective, AVAX’s price movement is showing signs of a possible rally continuation, provided the key support level holds.

• Support and Resistance Levels: The $31 support level has proven to be a strong barrier against downward pressure. As long as the price stays above this level, it could serve as a springboard for further gains. On the upside, the next significant resistance to watch is the $35 mark, which could be a short-term target if the bullish momentum sustains.
• Moving Averages: AVAX has shown a positive divergence with its 50-day moving average trending upwards. A continuation of this trend could signal a strong bullish crossover, increasing the likelihood of an upward breakout.

Market Sentiment and Broader Crypto Trends

The overall sentiment in the altcoin market has been relatively positive, with the total market cap (excluding Bitcoin and Ethereum) showing steady growth. This broader market trend adds a tailwind to AVAX’s rally potential. As the sentiment around altcoins improves, assets like Avalanche that have strong technical and on-chain metrics may experience increased buying pressure, further driving up prices.

What’s Next for AVAX?

Given the current market setup and positive metrics, AVAX seems poised for a bullish continuation. If the $31 support level holds and social sentiment remains strong, the altcoin could continue its upward trajectory. Traders and investors will be closely watching the price action around the $32.50 to $35 range, as a breakout above these levels could signal the start of a more extended rally.

Key Levels to Watch:

• Support: $31
• Resistance: $35

A move above the $35 resistance could open the door for AVAX to test higher levels, potentially setting the stage for a rally toward the next psychological barrier at $40.

Conclusion

Avalanche’s recent bounce from the $31 support level and its improving on-chain metrics suggest a bullish outlook in the near term. With high profitability among holders, rising social volume, and positive liquidation data, AVAX appears well-positioned for an extended rally. Traders should keep an eye on the critical resistance levels as a breakout above these could trigger a significant upward move.