- Despite increased whale activity, AVAX remains in a bearish trend, with prices struggling below key moving averages and testing critical support levels.
- Investors are alarmed by the upcoming token unlocks, which could potentially trigger a significant sell-off.
- “The AVAX price could plummet by 22% if the token unlocks result in a market dump,” noted a market analyst.
Find out how the upcoming AVAX token unlock could impact its price and what technical indicators are currently signaling about the market.
Potential Impact of the Upcoming Token Unlock
The AVAX token unlock scheduled for August 20 is anticipated to inject increased volatility into the market. Approximately $240 million worth of tokens will be released, with 9.54 million tokens heading towards team members, strategic investors, and community airdrops. Notably, Three Arrows Capital is among the recipients, raising concerns about the significant influx of tokens and its possible bearish impact on market prices.
The Historical Context of Token Unlocks
Historically, token unlock events are often viewed as bearish signals due to the sudden increase in circulating supply. Data reveals that 74.39% of AVAX holders are currently at a loss, with a mere 11.78% in profit. Should the price dip below $15, approximately $143 million worth of AVAX could become unprofitable, adding further pressure to the downtrend.
Technical Analysis: A Bearish Outlook?
Technical indicators depict a grim picture for AVAX. The token is trailing below both its 50-day and 200-day EMAs, situated at $25.86 and $31.06 respectively. These benchmarks serve as critical resistance levels, buttressing the current bearish sentiment. Additionally, pivot points present further resistance layers at $31.87 (R1) and $38.03 (R2).
Key Support Levels Under Scrutiny
On the downside, AVAX is testing the support levels around $20.67. A break below this mark could open the floodgates to more severe declines, with subsequent support found at $15.63 and $9.47. The Relative Strength Index (RSI) at 38.89 suggests the asset is approaching oversold territory, while the Chaikin Money Flow (CMF) at -0.13 indicates persistent selling pressure.
Whale Activity: A Glimmer of Hope?
Interestingly, despite the bearish trend, whale activity surrounding AVAX has surged. Recent data indicates large transactions totaling $131.91 million. However, it’s noteworthy that the concentration of large holders has slightly dropped, hinting at potential sell-offs. Still, the net inflow from these large holders increased by 75.5% in the past week, suggesting a calculated bet on a future price recovery.
Will AVAX Confirm a Bullish Reversal?
For a significant trend reversal, AVAX needs to break out above its falling wedge pattern and the 200-day EMA. Should this occur, it could invalidate the current bearish thesis. Potential short-term bullish targets are around $43.07 (R3 pivot) and a more optimistic long-term target is pegged at approximately $60.14.
Conclusion
With the impending token unlock looming large, AVAX faces a critical juncture. The market dynamics suggest heightened volatility, and while technical indicators point towards a downtrend, the substantial whale activity offers a glimmer of hope. Investors should closely monitor support and resistance levels and stay attuned to market movements to navigate the anticipated turbulence effectively.
