Avalanche (AVAX) has been experiencing a downward trend in its price, leading traders in the derivatives market to shift from a previously bullish stance to a more bearish outlook. Despite an impressive performance in 2023 and the first quarter of 2024, AVAX has been struggling to maintain its momentum in recent weeks.
Currently trading at $31.53, AVAX’s Long/Short Ratio indicates that traders anticipate a price decrease despite the token’s 8.66% 7-day decline. The Long/Short Ratio measures traders’ expectations towards a cryptocurrency, with values above 1 suggesting more long positions and values below 1 indicating increased bearish predictions.
Coinglass reports AVAX’s Long/Short Ratio at 0.79, reinforcing the bearish sentiment in the market. Additionally, the Open Interest for AVAX has decreased, aligning with the potential price decline. Open Interest refers to the value of outstanding contracts in the market and can indicate the influx or outflow of liquidity.
The market structure on the daily chart for AVAX suggests a potential decline, with the Exponential Moving Average (EMA) signaling a bearish trend. The 20 EMA crossed below the 50 EMA, creating a death cross, which typically indicates a downward movement in price. The Directional Movement Index (DMI) also supports the potential price decrease, showing a downward direction for AVAX.
Based on the analysis, AVAX may drop below $30 in the short term. However, this prediction could be invalidated if the broader market begins to recover, as AVAX’s price movement may be influenced by other altcoins. Traders and investors in the AVAX market will need to closely monitor these indicators and market trends to make informed decisions about their positions.
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