In the past 30 days, Avalanche (AVAX) has seen a 14.36% decline in value, contrasting its significant rally in early 2023. This drop follows a 292% increase over 90 days, suggesting a potential profit-taking phase. The question arises whether this is a temporary correction or the start of a longer bearish period for AVAX holders.
Technical analysis of the 4-hour AVAX/USDT chart indicates a decrease in demand for the token, with its price falling below the 20 and 50 Exponential Moving Averages (EMAs). This positioning, along with a death cross where the 50 EMA crossed above the 20 EMA, suggests a bearish outlook for AVAX.
The 0.786 Fibonacci retracement level points to a potential pullback to $35.07 before any significant demand influences the price. The Relative Strength Index (RSI) at 46.93 indicates that bullish forces may no longer control the momentum, and without increased buying pressure, AVAX may struggle to recover before another potential drop.
Liquidation signals from the liquidation map imply caution for short targets below $35, as liquidations occur when an investor’s position is closed due to price volatility and inability to cover margin balance with funding fees. High leverage long positions could face resistance between $38 and $40, with Santiment’s funding rate data showing a rate of 0.01%.
Analysts note that the funding rate, which reflects the cost of holding an open perpetual position in the market, has remained unchanged since January 9. A negative funding rate usually means short positions pay the funding fee to longs, but the current positive rate suggests active long and short positions in the market.