The AVAX price has been falling since the mini bull run in March and is currently in a critical position. In the meantime, the upcoming token unlock could significantly contribute to more downward pressure. Nevertheless, there is a silver lining in this situation as the price of Avalanche could surge after the unlock FUD dies down.
Impact of $200 million supply dilution on AVAX price
On August 20, the Avalanche team will release $200.53 million worth of AVAX tokens to the open market. This significant inflow could dilute the existing supply and potentially lead to a sharp drop in the token price.
Currently, the Avalanche price is at $20.89, down 1.4% in the last 24 hours according to CoinGecko. Trading volume has also suffered a decline. Messari Research and reported a historic low on August 19, shortly before the scheduled token release.
Further insights from Coin analysis show that AVAX open interest has decreased by 4.07% over the last 24 hours, while the price has fallen by 2.1% over the same period. This suggests that many traders are closing their long positions, probably at a loss, in anticipation of a further price decline.
The AVAX liquidation chart also shows a higher number of shorts compared to longs, reinforcing the trend of traders exiting long positions to avoid potential liquidations.
Furthermore, a closer analysis shows that there is a significant concentration of buy orders around the $20.30 mark, suggesting that many traders believe this price point could act as strong support. However, if the price falls below this level, it could trigger liquidations for those holding these positions.
Avalanche price targets $15 for recovery
Avalanche Price Prediction shows that the asset is in a clear downtrend and is moving inside a descending channel that has been tested multiple times since early April 2024. The price is currently trading near the lower boundary of this channel, indicating a possible further downside.
AVAX is currently struggling to break above the centerline of the falling channel and could find support near the lower boundary, which is between $19.50 and $20.00. If this support level fails, the next key support could be at $16.00, which marks the lower extension of the channel.
On the other hand, if AVAX manages to break the middle line of the descending channel at around $21.50, the upper boundary of the channel between $24.00 and $25.00 is likely to act as a stronger resistance level.
The stochastic RSI, which measures the relative strength index (RSI) relative to its own 24-hour high/low range, is currently at 82.54 (RSI line) and 79.30 (signal line).
This overbought condition suggests that buying pressure may have peaked, indicating a possible short-term decline or continuation of the downtrend, especially given the prevailing bearish market structure.
If AVAX price breaks the descending channel at $27.00 on heavy volume, it would signal a shift in market sentiment from bearish to bullish and invalidate the current bearish thesis. The next target would be around $35.00, which is consistent with the price action in early May 2024.
Should you buy AVAX?
AVAX remains in a strong downtrend, with bearish signals suggesting further downside potential. The next move is crucial as the price is near the lower boundary of the descending channel. The overall market sentiment, especially Bitcoin performance, could greatly influence the ability of the AVAX price to reach these higher targets.
Frequently Asked Questions (FAQs)
AVAX has been in a downtrend since the mini bull run in March. According to the latest data, it is trading at $20.89, down 1.4% in the last 24 hours. The price is currently in a critical position and faces possible further downward pressure due to the upcoming release of a token worth $200 million.
AVAX could fall 21% ahead of the $200 million token release, but a strong recovery is possible once the FUD dies down. This is the last major token release, which may reduce future selling pressure and contribute to the price recovery.
AVAX could face further downward pressure due to the current downtrend, but its price is near a critical support level. The overall market sentiment, especially Bitcoin’s performance, could influence its movement. If you believe in Avalanche’s long-term potential and are OK with the risks, consider buying after the token release FUD dies down.
Related articles
Evans Karanja
Evans Karanja is a content writer and scriptwriter with a focus on crypto, blockchain, and video games. He has worked with various startups in the past, helping them create engaging and high-quality content that captures the essence of their brand. Evans is also an avid crypto trader and investor, and he believes blockchain will revolutionize many industries in the coming years. When he’s not writing, you can find him playing video games or chasing waterfalls.
Disclaimer: The content presented may contain the personal opinion of the author and is subject to market conditions. Conduct market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
✓ Share: