Avalanche (AVAX) has experienced a significant drop of 13.49% this week, falling to $20.07. This decline has broken February’s low and brought the price closer to the critical support level of $15.28 that was last seen in March. The market sentiment has turned risk-off, with a 6.82% decrease in DeFi Total Value Locked (TVL) and a net outflow of $2.47 million on May 31st.
The delay by the Securities and Exchange Commission (SEC) in making a decision on Grayscale’s AVAX ETF until July 15 has further dampened market confidence. This delay comes on the heels of VanEck launching an institutional fund for Avalanche, which was expected to generate positive interest in the project. However, the uncertainty surrounding the ETF decision has led to a sell-off in AVAX and other cryptocurrencies like Cardano (ADA), which is facing a similar delay.
From a technical perspective, the price of AVAX has broken below the $21 support level, confirming a descending triangle breakdown. The failure to hold key support levels and the lack of buying interest indicate a bearish bias in the market. The Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) indicators also support a bearish outlook, with both showing downward momentum.
On-chain data reflects the weakening sentiment towards AVAX, with a decrease in DeFi TVL and significant net outflows from exchanges. More than 90% of AVAX holders are currently underwater, highlighting the prevailing risk-off sentiment in the market.
In conclusion, the breakdown below $20.20 has set up a potential retest of the March support level at $15.28. The bearish market structure, coupled with the negative on-chain trends and ETF delays, suggest that the downward trend in AVAX may continue in the short term. Unless there is a significant shift in market sentiment, AVAX could face further downside pressure in the coming weeks.