Avalanche has climbed the charts since the beginning of the year, following the rally of the broader crypto market as major cryptocurrencies penetrate important resistances. But now, the original token AVAX seems to have found a new ceiling.
according to Coingecko, AVAX fell 10% in the daily time frame, landing as one of the biggest losers today, January 25. This has led to speculation that the latest Avalanche rally was triggered by a partnership with Amazon Web Services and with Ali Baba just so-called “buy rumors, sell news” event.
The saying “buy the rumor, sell the news” describes a common trading technique where investors buy a security based on rumors about an upcoming announcement or data, and then sell the asset when the news comes out.
This can give traders the opportunity to buy a security before others do so that they can sell at a profit when demand and prices rise.
Image: CoinCentral
AVAX External and Internal Power Effects
Although the development of the on-chain is mainly bullish, external market forces seem to be the dominant force for token slippage today. At the time of writing, Bitcoin and Ethereum have approached their respective resistances without the breakthrough made by the bulls of the two cryptos.
But with new developments like ecosystems partnership with Canadian e-commerce company Shopify, we can see Avalanche becoming more mainstream as consumers from Shopify become familiar with the ecosystem.
However, recently news showing that on-chain metrics have not improved since the partnership announcement. The number of validators is still around 1,200 as of now. The DeFi area also shows no promise for Avalanche.
Image: DefiLlama
according to defilama, the total value of the locked ecosystem decreased by 3% since yesterday. This could be a sign of loss of investor confidence as investors will be misled by recent market movements.
At $16.96, What Is It Selling to Investors?
Investors are slightly bearish due to recent rejection at $19. according to CoinGlass datashort sellers outnumber long buyers by a significant margin, adding to the overall bearish weight of the situation.
Image: Coinglass
If the token continues to deteriorate and close today below $16.85, we can see the bears retesting the $15.74 support range. However, on-chain development should be able to follow the current market sentiment.
With the token’s high correlation with Bitcoin and Ethereum, investors and traders should also monitor the price movements of these coins. At the time of writing, bears in the BTC market retested the $22,661 support with ETH retesting the $1,520 support at the same time.
AVAX total market cap at $5.4 billion on the daily chart | Chart: TradingView.com
Currently, those who have long positions in AVAX should prepare for the short to medium term as the bears try to penetrate their positions. AVAX bulls should also try to consolidate above the support as this will allow the token to have a strong place to overcome the $19 resistance.
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