Avalanche's AVAX token is showing signs of weakening momentum following a critical rejection at the $20 resistance level and increasing bearish pressure. After peaking near $19.99, AVAX sharply fell below $18.70 with a 5.8% drop within 24 hours, reflecting significant profit-taking and liquidations as investor interest diminishes.
Technical indicators point to a sustained bearish outlook. Open Interest in AVAX derivatives has dropped to $445.03 million, the lowest in a month, signaling capital outflow. Liquidations accentuate this trend, with $1.38 million in long positions wiped out in a day, greatly exceeding the volume of short liquidations. The long-short ratio on the 4-hour chart favors bears slightly, and funding rates hover near neutrality.
Chart indicators such as MACD remain negative, with the RSI at 37 indicating weak momentum and room for further declines. The Chaikin Money Flow is negative, confirming an outflow of capital, while the Balance of Power underscores selling dominance. AVAX is currently testing key support near $18.50, a level that has held since mid-April but now faces increasing threat. Failure to hold this support could see a drop toward $16.14 or possibly the yearly low near $14.66, especially if Bitcoin experiences downward movement.
Despite bearish pressures, there is potential for stabilization. Should AVAX hold the $18.50 support and market conditions improve, a recovery toward the 50-day EMA at $21.11 is possible, though sentiment remains fragile. Overall, AVAX's price action is closely tied to Bitcoin’s broader market trends, emphasizing the altcoin’s dependency on the larger crypto market direction.