Avalanche has faced relentless selling pressure since mid-December, wiping out over 60% of its value and erasing all the gains from the impressive November 2024 rally. The extended downtrend has left investors uncertain about its near-term prospects as the entire market struggles to regain footing amid ongoing volatility. However, recent price action is offering a glimmer of hope, as AVAX appears to be stabilizing and finding strong demand at crucial levels.

Related Reading

Top analyst Ali Martinez has shared key insights, highlighting a potential recovery scenario for Avalanche. According to Martinez, AVAX is holding above a critical demand zone between $25.30 and $26.10. This level is acting as a strong support, offering the foundation needed to shift market sentiment. If the price continues to hold above this zone, Avalanche could gain the momentum necessary for a recovery rally, with a target of $30 in sight.

The coming days will be pivotal for AVAX as investors watch closely for signs of strength or a potential breakdown. While the bearish sentiment from December lingers, this demand zone could be the launchpad for a turnaround, sparking renewed optimism among traders and long-term holders alike. Will Avalanche finally bounce back? Time will tell.

Avalanche Poised For A Recovery

Avalanche has been trading in a state of indecision, with bulls unable to push the price above the $27 mark and bears failing to drive it further down. This tug-of-war has kept the market in a tight range, leaving traders and investors uncertain about the next major move. While some analysts are optimistic about a potential recovery, others are warning of a continuation of the bearish trend that has plagued AVAX since mid-December.

Martinez shared critical insights on X, highlighting that Avalanche is holding above a key demand zone between $25.30 and $26.10. This level has acted as strong support over the past few days, preventing further downside and giving bulls an opportunity to stage a comeback.

According to Martinez, this demand zone could provide the momentum needed for a rally toward the $30 mark. However, the price must first clear the $27 level, which has proven to be a significant resistance point. If AVAX manages to break through this level, a rally could follow quickly.

The next few days will be crucial for Avalanche’s price action. Bulls need to reclaim the $27 mark to shift sentiment and attract more buyers. On the flip side, losing the key support zone could result in a continuation of the bearish trend, potentially taking AVAX into lower demand levels.

Related Reading

As the market watches closely, all eyes are on whether Avalanche can muster the strength for a recovery rally or succumb to further selling pressure. This indecision sets the stage for a potentially explosive move, and traders should remain cautious as the market finds its direction.

AVAX Price Testing Crucial Supply

Avalanche (AVAX) is trading at $26.7 following a 7% surge yesterday, signaling renewed efforts by bulls to regain control of price action. The $27 mark has emerged as a critical supply level, acting as a barrier to further upward movement. Bulls are currently focused on reclaiming this level, which has held the price down for several days. If AVAX can successfully push above the $27 mark and clear the $28 resistance, a recovery rally could gain momentum, potentially driving the price toward the $30 mark.

However, the current rally faces challenges as selling pressure remains strong at these key levels. Losing the $25 support zone would likely halt the recovery attempt and lead to further consolidation below the key supply range that AVAX is currently testing. A breakdown below $25 could bring Avalanche back into the $23-$24 demand zone, prolonging the uncertainty surrounding its short-term direction.

Related Reading

The coming days will be crucial in determining whether AVAX can sustain its recent gains and reverse its bearish trend. For now, bulls must build on yesterday’s momentum by reclaiming and holding the $27 mark as support. This would set the stage for a breakout above $28, shifting market sentiment in favor of a broader recovery rally.

Featured image from Dall-E, chart from TradingView

The speculations over a potential AVAX price rally soared as Avalanche founder Emin Gun Sirer drew parallels to Bitcoin’s capped 21 million supply. Highlighting AVAX’s maximum supply of 715.74 million and its deflationary mechanism of burning transaction fees, Sirer contrasts it with Ethereum’s uncapped supply. This scarcity-driven approach positions it as a strong contender among digital assets, sparking investor confidence and raising hopes for a potential price surge in the near future.

AVAX Price Gains Attention As Founder Highlights Bitcoin-Like Supply Cap

On December 25, AVA Labs CEO and founder Emin Gun Sirer posted on X, emphasizing a critical aspect of Avalanche – its capped supply, which he likened to Bitcoin’s 21 million fixed limit. Unlike Ethereum, which has no maximum supply and currently has over 120 million coins in circulation, the Avalanche token has a total cap of 715.74 million coins. This scarcity, combined with Avalanche’s mechanism of burning all transaction fees, has sparked discussions about its potential impact on AVAX price growth over time.

Sirer explained that Bitcoin’s capped supply has been a cornerstone of its value, attracting long-term investors and fostering confidence in its deflationary nature. By adopting a similar model, Avalanche aims to position itself as a scarce digital asset with strong value-accrual dynamics. This deflationary mechanism could drive interest in capped-supply tokens.

Also, the comparison with Bitcoin positions Avalanche token as a unique player in the crypto market, offering scarcity alongside a robust ecosystem. These features could make it appealing to investors looking for long-term value, which in turn could boost the Avalanche price ahead. This is especially true in a market dominated by inflationary assets like Ethereum.

What’s Next For Avalanche?

The latest Avalanche price chart showed that the crypto declined 2% to $40.973. Its 24-hour low and high are are $40.08 and $41.84. The token market cap is $16.5 billion with $453 million of trading volume. Despite the recent decline, its market cap and rank suggest resilience and ongoing investor interest.

The expert said that the current price action indicates a bullish momentum ahead for the crypto. Highlighting $34.71 as a key support zone, the expert has shared a strong forecast for the crypto ahead. According to Rose, the AVAX price could target the brief $64.04 or $79.77 mark ahead.

Besides, Avalanche recently launched the Avalanche9000 upgrade. This aims to improve scalability and make launching subnets cheaper. The upgrade could increase network activity, boosting AVAX price in the future.

✓ Share:

Coingape Staff

CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.