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Avalanche (AVAX), a prominent player in the altcoin market, is facing a period of consolidation despite recent gains. The lack of significant growth prospects for AVAX and the selling sentiment among its holders are key factors influencing its current market position. The dominance of short-term investors, who typically hold their investments for a month or less, makes AVAX’s price susceptible to sell-offs. Interestingly, nearly 28% of all circulating AVAX, amounting to over 107 million tokens, is held by these short-term holders. This segment, along with the 40% held by mid-term investors—who keep their assets for more than a month but less than a year—plays a crucial role in Avalanche’s market dynamics.
Secondly, Avalanche faces a formidable challenge due to a major demand barrier. According to the Global In/Out of the Money (GIOM) indicator, around 12.47 million AVAX, acquired at an average price of $38 and worth over $473 million, are awaiting profits. The path to profitability is steep, as AVAX would need to surpass $42 to ensure these investments are in the green. Given the current market conditions, achieving this price point appears unlikely, further contributing to the consolidation narrative.
Avalanche’s price has seen a 15% rally over the past three days, moving up from $31 to $36. This recent uptick brought some optimism, but the broader picture still reflects a trend of consolidation, with AVAX struggling to break out of a month-long range capped at $39. The altcoin has attempted to break this consolidation pattern nearly three times in the past month, failing each time. Even more telling is its inability to invalidate the death cross, a bearish indicator where the 50-day Exponential Moving Average (EMA) crosses below the 200-day EMA. Until a crossover happens in the opposite direction, signaling bullish momentum, AVAX is likely to remain in a state of consolidation. However, should market dynamics shift and investors choose not to sell, there could be potential for AVAX to move beyond this phase and aim for higher support levels, challenging the current consolidation narrative.
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