AVAX’s price has dropped to levels not seen since early 2021, following widespread liquidations that wiped out vital support at $8, leading to a predominantly bearish sentiment among traders.
Summary
- AVAX’s price has fallen to its lowest point since January 2021 due to a massive liquidation in the crypto market that dismantled important support levels.
- Open interest has decreased to $159 million, with more than 70% of derivative positions being short, reflecting a bearish market sentiment.
- Traders are monitoring the “Ultimate Support” level at $6.25; a breach below this may lead AVAX to further declines towards $5.46 and $4.68.
As reported by crypto.news, Avalanche (AVAX) saw a 14% decline, hitting an intraday low of $6.26 on Saturday, June 6, the lowest since January 2021, before stabilizing at $6.64 at the time of this report.
This sharp decline followed Bitcoin (BTC) dipping briefly below the key $60,000 level, nearing $59,000, prompting traders to reduce risk as leveraged long positions were liquidated. Moreover, the Crypto Fear & Greed Index dropped to 12, staying in Extreme Fear territory, signifying dwindling sentiment in the digital asset market.
Leverage Flush Leaves AVAX Near Early 2021 Range
The recent downturn was not attributed to a specific weakness in the Avalanche network. Prior to the selloff, Avalanche had shown strong institutional and on-chain activity, with over $1.16 billion in on-chain real-world assets and the launch of regulated AVAX futures by CME Group.
However, these developments did little to shield against the market’s forced deleveraging. Additional context shows over $1.86 billion in liquidations across crypto derivatives, with high-beta layer-1 tokens like AVAX experiencing greater losses compared to Bitcoin.
Derivatives positioning has also diminished. Open interest in AVAX has dropped to approximately $159 million, indicating fewer traders were willing to hold active positions during this downturn. In contrast, over 70% of positions remain short, signaling the market’s inclination towards further downside rather than a rapid recovery.
According to CoinGlass liquidation heatmap data, significant leverage remains above the current price, particularly around $7.00, $7.50, $8.00, $8.50, and the $8.80–$9.20 range. A rebound into these zones could result in short liquidations, but current market dynamics have not shown sufficient spot demand to initiate that squeeze.
Analyst Dr. Chart MAZEN previously mentioned in an X post that AVAX remains at risk of further downside unless buyers can reclaim higher levels. “I have identified a classic continuation pattern for a downside if the $8.20 area breaks,” he stated, while keeping watch on “6.53” and “5.77” as potential lower thresholds.
Technical Setup Keeps the Bottom Case Fragile
Today, AVAX neared its last notable Murrey Math support zone at around $6.25, referred to as ‘Ultimate Support’ on the daily chart. The token had previously lost the $7.81 and $7.03 support bands during the liquidation-induced selloff, placing the $6.25 area as a critical line that bulls must protect to avoid a deeper plunge toward the oversold region near $5.46.
At the time of this writing, AVAX is trading below both the 50-day moving average at $9.15 and the 200-day moving average at $10.66.
To build a bullish market structure, reclaiming these levels is crucial, although the defense of the $6.25 support zone has started to attract attention from traders looking for signs of a potential long-term bottom.
Resistance currently sits around $7.03, followed by $7.81 and $8.59. A closure above $8.20 would reduce the downside continuation scenario indicated by Dr. Chart MAZEN, while a significant movement above $10 would redirect focus on the 200-day average and key trend resistance.
The downside risks remain clear. A daily close below $6.25 would keep sellers dominating and expose AVAX to the -1/8 Murrey level around $5.46. Beyond this, the next significant downside zone lies near $4.68, while Dr. Chart MAZEN’s $5.77 level might act as the initial test before further capitulation.
AVAX can still form a bottom if buyers defend the $6.25–$6.50 area and encourage shorts to unwind above $7.50. Until the price reclaims $8.20 with ample volume, the current chart reflects a fragile recovery attempt rather than a confirmed reversal.
Disclosure: This article does not constitute investment advice. The information and materials presented on this page are intended for educational purposes only.
