• Avalanche’s [AVAX] price recently dropped from a high of $22.8 to a low of $19.4, a 14% plunge.
• Bulls launched an impressive recovery attempt, but their efforts seemed unsustainable as suggested by technical indicators.
• Avalanche’s [AVAX] investors‘ confidence improved with development activity, but lack of demand in the derivatives market could limit recovery momentum.
Avalanche’s [AVAX] Price Drop
Avalanche’s [AVAX] price recently dropped from a high of $22.8 to a low of $19.4, a 14% plunge. This occurred after Bitcoin [BTC] temporarily lost the $23k zone.
Bulls‘ Recovery Attempt
In response to this drop in prices, bulls launched an impressive recovery attempt, but their efforts seemed unsustainable as suggested by technical indicators such as the Relative Strength Index (RSI) and On Balance Volume (OBV). AVAX faced price rejection at $21.04 despite crossing above the downtrend line which flipped the short-term market structure to bullish.
Improved Investors‘ Confidence
Santiment’s data showed that Avalanche’s[AVAX] investors‘ confidence has been improving since 5 February as indicated by the flipping of weighted sentiment from negative to positive and increased development activity around this time period. However, the Funding Rate was relatively flat during this same period indicating that more demand for the asset in the derivatives market is needed for strong uptrend momentum necessary for bypassing price rejection level at $21.04 .
Price Rejection Level
As such, AVAX could settle on the seven-period EMA of $20.52 or $20-40 support levels before returning to retest the 21$04 level unless Bitcoin loses its 23K zone leading to further devaluation below these levels thus invalidating all bullish bias discussed above and settling at either 19$81 or downtrend line instead .
Conclusion
Overall, Avalanche’s [AVAX] investors seem confident about its prospects despite facing limited recovery due to lack of demand in derivatives market and potential drops if BTC loses its 23K zone .