Avalanche (AVAX) has faced significant headwinds in recent weeks with its price dropping roughly 25% since May 21st, 2024. This decline coincides with the news of potential spot Ethereum ETFs, which may have drawn investment away from alternative smart contract platforms like Avalanche.
Price Decline and Support Levels
As of June 11th, 2024, AVAX is trading around $31.47, nearing its 25-day low. This price movement threatens to breach a crucial support level at $30. However, a closer look at on-chain data reveals a potentially bullish trend.
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While the overall sentiment surrounding AVAX remains bearish, a growing number of investors are staking their coins. Staking involves locking up crypto holdings in a smart contract to support network operations and earn passive income. This increase in staking activity during a price dip can be interpreted as a sign of long-term confidence from core holders and node validators.
Staked AVAX Surges Despite Price Drop
Since May 22nd, 2024, the total amount of AVAX staked has risen from 260.3 million to 265.4 million. This represents an additional 5.1 million AVAX staked at a time when prices were declining. This trend suggests that short-term sellers may have already exited the market, leaving holders seeking long-term value through staking rewards.
Reduced Selling Pressure and Potential Rebound
By staking their AVAX, investors effectively remove them from the circulating supply, which can help alleviate downward pressure on the price. The $150 million worth of newly staked AVAX (based on current prices) contributes to this effect. This staking activity, and the potential for the $30 support level to hold, could pave the way for a bullish reversal in the coming days.
The Bollinger Band technical indicator adds weight to the possibility of a rebound. When the price reaches the lower Bollinger Band (currently around $31.45), it can signal oversold conditions and a potential price reversal. If the $30 support level holds, AVAX could head towards $35.
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Downside Risk and Alternative Support
However, if the $30 support level fails to hold, bulls may look to establish a new support level at $25, a key psychological price point.
While AVAX faces short-term challenges, the recent increase in staking activity suggests that some investors remain confident in its long-term potential. The upcoming days will be crucial in determining whether the $30 support level holds and paves the way for a price recovery.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Times Tabloid is not responsible for any financial losses.
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