Avalanche (AVAX) Eyes Recovery Amidst Lingering Bearish Pressure
After enduring a prolonged downtrend since June 11, Avalanche (AVAX) has finally shown signs of recovery. The cryptocurrency tumbled by 26% in less than two weeks but managed to stage a notable rebound earlier this week, registering a 9.26% surge on Monday.
Recent on-chain data reveals that while retail investors have begun to take profits, so-called “smart money” investors remain confident, holding onto their AVAX positions despite market volatility. Interestingly, derivative traders among retail participants have started to place bearish bets, opening new short positions in anticipation of further downside.
A promising uptick in on-chain activity has accompanied this price action. Although activity levels have not yet returned to the peaks observed in April, the 7-day active addresses metric recorded a substantial 204% increase, indicating renewed interest and engagement from network participants. Sustained network activity could bolster demand for AVAX and potentially fuel its ongoing recovery efforts.
From a technical perspective, Avalanche continues to trade within a defined range stretching from $16 to $22.90, with a mid-range resistance level near $19.50. The recent decline tested the range’s lower boundary — a level that successfully held as support in both March and April. Bulls have once again defended this support zone, raising hopes for a move toward the $19.50 mid-range resistance.
However, technical indicators still reflect underlying bearish momentum. The Awesome Oscillator remains in negative territory, while the On-Balance Volume (OBV) has yet to recover above its early May lows. This suggests that sellers still maintain a degree of control, and any move toward resistance could face renewed selling pressure — particularly if daily trading volume continues to underperform.
Despite the potential for a short-term climb towards $22.90, it’s important to recognize the scale of AVAX’s broader decline. Since its December 2024 peak at $54, Avalanche has lost roughly 66.3% of its value, currently trading around $18.10.
On-chain metrics further illustrate the market’s fragility. According to the Global In/Out of the Money indicator, nearly 66% of AVAX holders are currently underwater, with only 27% at breakeven. This leaves a substantial pool of investors who may be eager to sell into any rally, potentially capping further upside.
In the broader context of the altcoin market, caution remains warranted. Investor sentiment across most alternative assets remains weak, and any sustained recovery for Avalanche may hinge on a decline in Bitcoin dominance and a renewed capital rotation into altcoins.
For now, AVAX traders and investors would be wise to remain vigilant as the market continues to navigate uncertain waters.
