AVAX Price Decline: The Impact of the Upcoming Token Unlock
Since the brief rally in March, AVAX’s price has been steadily declining and now stands at a crucial juncture. The impending token unlock could further exacerbate this downtrend, but there may be a silver lining as the price could see a significant rebound once the initial fears dissipate.
$200M Supply Dilution and Its Implications for AVAX
On August 20, the Avalanche team plans to release AVAX tokens worth $200.53 million into the market. This large supply increase is likely to dilute the current circulating supply, potentially leading to a steep drop in the token’s value.
As of now, AVAX is trading at $20.89, reflecting a 1.4% decrease over the past 24 hours, according to CoinGecko. Additionally, trading volumes have seen a decline, with Messari Research reporting an all-time low on August 19, just before the scheduled token release.
Further data from Coinalyze indicates a 4.07% drop in AVAX’s open interest in the last 24 hours, while the price has decreased by 2.1% during the same period. This suggests that many traders are closing their Long positions, likely at a loss, in anticipation of further price drops.
The AVAX Liquidation Map reveals a higher volume of Shorts compared to Longs, reinforcing the trend of traders exiting Long positions to avoid potential liquidations.
Moreover, there is a notable concentration of buy orders around the $20.30 level, signaling that many traders view this as a potential support zone. However, a break below this level could trigger a wave of liquidations for those holding these positions.
Avalanche Price Poised for a Rebound at $15
The price outlook for Avalanche shows the asset in a clear downtrend, confined within a descending channel that has been tested multiple times since early April 2024. Currently, AVAX is trading near the lower boundary of this channel, suggesting a potential further decline.
The token is struggling to break above the midline of this descending channel and may find support near the lower boundary, which lies between $19.50 and $20.00. If this support level fails, the next significant support could be at $16.00, marking the channel’s lower extension.
Conversely, if AVAX breaks above the midline of the descending channel around $21.50, it could face stronger resistance between $24.00 and $25.00 at the upper boundary.
The Stochastic RSI, which compares the RSI to its own high/low range over 24 hours, currently reads 82.54 (RSI Line) and 79.30 (Signal Line).
This overbought condition suggests that buying pressure may be reaching its peak, indicating a possible short-term pullback or a continuation of the downtrend, especially given the prevailing bearish market structure.
Should AVAX break above the descending channel at $27.00 with strong volume, it would signal a shift in market sentiment from bearish to bullish, invalidating the current bearish outlook. In this scenario, the next target would be around $35.00, aligning with price levels from early May 2024.
Is It Time to Buy AVAX?
AVAX remains in a strong downtrend, with bearish indicators suggesting the potential for further downside. The next move will be crucial, with the price near the lower boundary of the descending channel. Broader market sentiment, particularly Bitcoin’s performance, could play a significant role in determining whether AVAX can reach higher levels.
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