Avalanche’s price has recently fallen to a significant support level, signaling an early bullish trend that may indicate a potential recovery.
Currently, Avalanche (AVAX) is trading at the crucial support mark of $20, representing a decline of over 65% from its peak in December.
This downturn can primarily be attributed to the broader market trends affecting both cryptocurrency and stock markets, as negative risk sentiment has taken hold. Bitcoin (BTC) and many altcoins have entered technical bear market territory this year.
Two prominent risks influencing market dynamics include the proposed tariffs from Donald Trump, and the rising anxiety surrounding a potential collapse of the artificial intelligence bubble.
Additionally, Avalanche has been gradually losing its market share to emerging layer-1 platforms like Berachain, Base, Arbitrum, and Sui. Its total value locked (TVL) is currently at $1.66 billion, which is significantly lower than Berachain’s $3.1 billion and Base’s $2.95 billion. At its peak, Avalanche had amassed over $12 billion in assets.
Network insights reveal that Avalanche’s app revenue has also seen a decline in recent months. In March, the network generated merely $430,000, a stark drop from the peak of $52 million in December 2023.
On a more positive note, Avalanche has garnered attention for some encouraging developments. Recently, it was chosen by Sumitomo Mitsui Financial Group, the second-largest bank in Japan, to provide blockchain infrastructure for a forthcoming stablecoin.
There is also anticipation surrounding the potential approval of a spot AVAX ETF by the Securities and Exchange Commission. If this comes to fruition, it would give U.S. investors access to AVAX. However, it remains uncertain whether there would be a sustained interest, as recent data indicates a strong inclination toward spot Bitcoin ETFs.
Upon analyzing the technical aspects of Avalanche’s price, the weekly chart indicates that AVAX has reached the crucial psychological threshold at $20. This level is significant as it successfully held in September of the previous year, leading to a remarkable 195% rebound.
Currently, Avalanche is exhibiting a falling wedge pattern, a commonly recognized bullish reversal signal. This pattern consists of two descending and converging trendlines, which often precedes an upward breakout. Should this happen, the next resistance level to monitor will be $30.
Conversely, a decisive break beneath the $20 support threshold could imply further declines, with the next major support target being $9, which represents its lowest point in 2023.
