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Avalanche (AVAX) experienced a significant 9.5% drop in market value within 24 hours. This situation has caused concerns among both investors and analysts. Currently priced at $25.07, AVAX is very close to the critical support level of $23.34. This situation could indicate further downside potential for the cryptocurrency AVAX. So, what is the reason for this decline?
What Caused the Sudden Decline?
The sudden drop is primarily attributed to the transfer of 1.96 million AVAX by an entity identified as “0x32…4f30,” according to ZachXBT. These AVAX, worth approximately $54.2 million, were moved between exchanges like Coinbase, Binance, and Gate using cross-chain bridges such as THORChain.
Analysts pointed to this large-scale transfer as a significant factor exacerbating the bearish sentiment surrounding AVAX. The market’s reaction was swift and negative, reflecting concerns related to potential sales and increased supply reaching exchanges.
As a natural consequence of such a development, the downward pressure on AVAX’s price intensified. Subsequently, the cryptocurrency AVAX began to slowly approach critical support levels, which, if breached, could trigger additional sales and a prolonged bear market for the cryptocurrency.
AVAX Retracted Sharply After Reaching $65 in 2024
Historically, the cryptocurrency Avalanche showed strong performance at the beginning of the year, gaining attention with its increase in the first quarters. However, since May 23, when its price was $38.31, AVAX has struggled to maintain its upward momentum.
Despite briefly displacing meme coin Shiba Inu from the top 10 cryptocurrencies by market value in May, the recent decline in AVAX’s price brings a series of disappointments for investors. My advice here is for investors to closely monitor the critical support level of $23.34 for AVAX. If the price falls below this level, the decline could deepen further.
