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In recent trading sessions, Avalanche (AVAX) has seen a significant drop in its market value, with its price tumbling to a six-month low.
Over the past month, AVAX has plummeted by 25%, with a 14.7% drop in just the past week and a further 0.3% decrease in the last 24 hours, bringing its current trading price to $24.23. This decline marks a stark turnaround for an asset that has otherwise shown strong performance in previous months.
Additional 60% Correction Ahead For AVAX, But Why?
The persistent downward trend has not gone unnoticed in the crypto community. Technical analysis reveals troubling signs, with the AVAX chart displaying a potential for further declines.
Crypto analyst Patel, referencing the current chart patterns, speculates that AVAX could soon face an additional 40% to 60% drop in its value. The formation of a head-and-shoulder pattern, a classic technical indicator of future price decreases, drives this bearish outlook.
Patel pointed out the critical nature of the head-and-shoulder pattern forming on the AVAX chart, noting that the neckline support has already been breached. This break suggests a bearish continuation, with Patel forecasting potential declines to as low as $19 and possibly even $13.
📉 AVAX/USDT Chart Analysis:$AVAX is forming a head & shoulder pattern. The NECK LINE support is broken, indicating a bearish trend.
Expecting a 40%-60% downside move. Targets: $19 & $13.
Not saying don’t open long scalps, but use strict stop loss. Trade wisely!#Crypto… pic.twitter.com/FFetHS2GZc
— Crypto Patel (@CryptoPatel) June 23, 2024
Given these predictions, Patel advises traders and investors to exercise caution, particularly those considering opening long positions. He emphasizes the importance of implementing strict stop-loss measures to manage risks associated with the anticipated volatility.
External Influences And Optimistic Counterpoints
Further compounding AVAX’s market woes is the activity of significant holders moving large volumes of AVAX to major exchanges.
Prominent on-chain investigator ZachXBT has recently linked the ongoing decline in AVAX’s value to significant transactions by a specific entity identified as ‘0x32…4f30.’
This entity has reportedly transferred approximately 1.96 million AVAX, valued at $54.2 million, to major exchanges, including Coinbase, Binance, and Gate, and has also facilitated transfers via THORChain.
This type of large-scale movement typically indicates a bearish sentiment among major holders, potentially leading to further declines if the trend continues.
Despite the prevailing downturn in AVAX’s performance, some analysts remain optimistic about the broader altcoin market. Analyst Captain Faibik suggests the current correction period could be a prime investment opportunity for long-term investors.
According to Faibik, the altcoin sector has shown resilience and growth over the past several months and is merely undergoing necessary corrections after significant gains.
He predicts that the latter half of the year could witness a robust recovery, advising investors to “buy the dips” in anticipation of a bullish resurgence in Q3 and Q4.
Q3 & Q4 gonna be EPIC for the Altcoins..!!
I understand that this period is very Challenging for Altcoin Holders, given that altcoins are down 40-50%.
However, let’s not Forget that we have made Significant gains over the last 7-8 Months (since October 2023).
From October 2023… pic.twitter.com/w5tterrE8O
— Captain Faibik (@CryptoFaibik) June 23, 2024
Featured image created with DALL-E, Chart from TradingView