Avalanche, Historic Sell-off Warning...Downtrend Continues Amid Middle East Fears

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Avalanche (AVAX) continues its price correction phase, pushed back from resistance levels due to escalating tensions in the Middle East and bearish signals in the derivatives market.

According to crypto-specialized media FXStreet on April 23 (local time), Avalanche is extending its downtrend, trading below $9.30 as of Thursday after being rejected at a major resistance zone. News that Iran fired upon three vessels in the Strait of Hormuz has sharply dampened risk-asset sentiment across the market. While Bitcoin (BTC) has halted its upward momentum near $77,800 and entered a wait-and-see stance, altcoins like Avalanche are showing a more vulnerable trend under relatively greater selling pressure.

Stagnant demand from institutional investors is also fueling the price decline. Inflows into Avalanche spot ETFs this week have virtually halted since last week's $5.26 million inflow. This indicates that institutions are reluctant to increase their exposure to Avalanche amidst growing uncertainty in the Middle East. Investors are maintaining cash positions and closely monitoring market direction in anticipation of potential additional geopolitical contingencies.

Derivatives indicators further reinforce the pessimistic outlook for Avalanche. Currently, Avalanche's long-short ratio is 0.84, nearing its lowest level in a month, which means traders are betting more on a price decline. Furthermore, the weighted funding rate for open interest has turned to minus 0.0054%, technically proving that bearish forces are taking control of the market. It's as if the market has entered a phase where selling pressure overwhelmingly outweighs buying pressure.

From a technical analysis perspective, Avalanche remains below all major exponential moving averages, continuing its bearish momentum. The 50-day exponential moving average at $9.41 and the 100-day exponential moving average at $10.36 are forming strong resistance overhead. The Relative Strength Index is hovering below the neutral level of 50, and the Moving Average Convergence Divergence (MACD) is also slipping back into negative territory, warning of further downside potential.

For Avalanche to establish a rebound, it must first decisively break above the Fibonacci 23.6% retracement level at $9.29 and the 50-day exponential moving average at $9.41. However, if it fails to overcome this zone, there is a high risk of it being pushed down to the horizontal support level of $8.39. If the $8.39 level also breaks and a daily closing price is established below it, the price is expected to plummet to the lows of the previous cycle, solidifying the downtrend even further.

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