AVAX’s price has been hovering above a stable support level with no signs of a volatile move in sight. However, things could change as Bitcoin’s price is starting to look bullish. Therefore, investors need to pay close attention to altcoins as they could explode soon.
Avalanche and its capacity to move higher
AVAX has crashed by 84% from its all-time high of $146.75. A majority of its downswing took place over the last two weeks or so. After the FOMC meeting in the first week of May, trouble started brewing for UST and LUNA. This development ultimately exacerbated the already weak market structure and crashed Bitcoin’s price from $31,000 to $29,000 and then, $25,000.
This sudden downtrend caused altcoins including AVAX to suffer a similar fate. For AVAX, it was a 67% downswing, one that pushed it down from $69.46 to $22.43 and briefly shattered the $31.38-barrier.
So far, the recovery above this level has flipped into a support level, suggesting that a further uptrend is likely. The immediate hurdle at $39.92 is where buyers will face some resistance from sellers which will be a determining factor.
If Avalanche manages to flip this level into a support barrier again, it will open the path for a quick 25% run-up to $52.53. In total, this move would represent a 55% ascent from the current position and is likely where the upside is capped for AVAX.
A failure to move beyond $39.92 will indicate that the buyers are weak and non-collaborative. This could trigger a retest of $31.38.
If sellers take control and flip this barrier into a resistance level, it will invalidate the bullish thesis and trigger a crash to $20.80.
What does the volume say?
Further supporting the poor state of buyers for AVAX is the on-chain volume. More often than not, a spike in on-chain volume indicates that investors are interacting with the blockchain and are likely investing in the token.
More so, an uptick in this metric is often followed by a spike in AVAX’s price. It can sometimes allow traders to catch a trend early on. For AVAX, the on-chain volume has dried up from a peak of 2.58 billion to 673 million. This 74% downtick in on-chain volume is indicative of waning investor interest and reveals a capital flight.
Therefore, investors need to wait for a flip of the $39.92-hurdle into a support floor to position themselves long.
Source: Santiment
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