AVAX expected to retrace to $25 amid long-term bullish signal
Avalanche [AVAX] is about to pull back to around $25. Coinglass liquidation heat map data shows that the pool size is $4 million at $25.
Such a large concentration of liquidity suggests that this important price level may be market-biased and could trigger large-scale liquidations.
If the market performs as expected, this move will be confirmed in the coming days as traders focus on this level.
How Holding for Distribution Accelerates the Decline
According to IntoTheBlock Holding distribution data, AVAX whales further increase the probability of a downward correction.
These significant cryptocurrency investors continue to buy more AVAX shares, which could exacerbate already strong bearish investor sentiment if they sell at $25.
Large concentrations of transactions at these levels imply potential instability; however, in this case it may be entirely consistent with the gravity of the clearing pool.
As the number of holders holding more than $100,000 of AVAX surges by about 7%, their price action will have a significant impact on the direction of the market. Coinglass 24-hour short ratio data is 0.90, which indicates that the market is close to a balance point.
However, the slowly decreasing ratio as prices fall and enter the liquidation pool suggests that bearish pressure is building in the short term.
9.54 million AVAX tokens issued
Avalanche has unlocked 1.33% of the maximum supply of AVAX.
Solana [SOL], Worldcoin [WLD], and Avalanche [AVAX] led altcoin token unlocks, with AVAX issuing 9.54 million AVAX tokens, or 1.33% of its total max supply.
This AVAX event marks the final major token unlock and distribution to the team, foundation, strategic partners, and airdrop recipients.
As the last major unlock, many are questioning whether the influx of AVAX will drive up the price of Avalanche or stabilize it.
Going forward, Avalanche will move to smaller, Foundation-only token unlocks, releasing 1.6 million AVAX each quarter until July 20, 2030.
This shortened unlocking schedule is a strategic move to manage supply and minimize selling pressure, potentially keeping the price of AVAX stable despite the gradual increase in circulating tokens.
This unlock will have a significant impact on prices, so keep an eye on it. Historically, similar token unlocks have also resulted in significant price movements.
As the overall cryptocurrency market is trending upward, AVAX has shown signs of moving higher.
AVAX Bearish Signal
The Stochastic RSI has recently entered bearish territory, which increases the potential for a pullback. This again adds another worrying dimension as it usually precedes a downtrend move, this time accompanied by a liquidation heatmap and whale activity.
The combination of the liquidation heatmap, whale activity, and technical indicators like the Stochastic RSI suggest a bearish short-term outlook for AVAX.
Due to these bearish factors, the probability of a retracement towards the $25 level increases before the market determines a clear direction.
Has AVAX hit bottom?
From a technical perspective, AVAX appears to have bottomed and price action suggests upside potential. On the AVAX/USDT 4-hour chart, the price has reclaimed support between $22.84 and $21.06.
A close above this range this weekend would indicate a bullish signal, while a break below it could trigger further selling pressure. Elliott Wave analysis also shows a positive outlook for AVAX.
Additionally, Avalanche’s 3-day chart shows a falling wedge pattern, which is a bullish sign. AVAX has bounced off the lower trendline and is confident that it will soon break out of this wedge.
If such a breakout occurs, AVAX could see a rally similar to the 200% rally it experienced in November-December 2023.
The controlled release of AVAX tokens could further support this potential price rally in the upcoming altcoin season.
The weekly chart also confirms Avalanche’s uptrend. Not only did AVAX break out of the bottom, it also completed a typical retest of the resistance level, which has now turned into support.
The flip from AVAX support strongly confirms the uptrend, in line with the general positive sentiment in the wider crypto market and favorable conditions for risk assets.
With the weekly candle closing in a bullish posture, Avalanche [AVAX] is expected to continue its bull run into the fourth quarter of 2024.
In simple terms
Currently, whale activity and holding distribution may promote price movements. Avalanche unlocked 1.33% of AVAX's maximum supply and conducted a controlled release, which is expected to lay the foundation for its potential subsequent price increase. The reversal of AVAX's support level strongly confirmed the upward trend.
I think the price will consolidate for a while in the short term, and some technical indicators support a short-term bearish outlook, and the upside potential is expected to be limited. But in the long run, as the tokens are unlocked, their circulation and stability will increase, which will help the subsequent price to close in a bullish posture, which will enable AVAX to continue its bull market in the fourth quarter of 2024. However, we should also pay attention to the volatility caused by the possible large-scale liquidation.
