Avalanche (AVAX) Price Approaches a Bullish Reversal Point —Key Indicators 

Key Insights:

• Avalanche (AVAX) price has found support at the $37 area after tumbling 10% on Wednesday, Jan 3. 
• Avalanche investors have staked 7.05 million AVAX (~$260.85 million) this week, in strategic reaction to global crypto market pullback.
• Historical accumulation trends of the current AVAX holders provide insights into the relative strength of the $35 support level.  

Avalanche (AVAX) price plunged to a 30-day low of $36 on Wednesday as the global crypto market suffered abrupt dips and widespread liquidations. On-chain analysis examines how the recent shift in the Avalanche’s staking dynamics could power a bullish reversal in the days ahead. 

Can Avalanche bulls capitalize on the recent drop-off in market supply to launch an instant rebound to $40? 

Investors Stake AVAX Worth $260.85 Million Amid Market Dip

Avalanche price tumbled 10% on Wednesday amid widespread liquidations in the crypto market. The meltdown, linked to rumours surrounding Bitcoin (BTC) Spot ETF rejection, saw the global crypto sector lose $109 billion in market capitalization within a frenetic 12 hours on Jan 3. 

However, having found support around th $37 area, a vital on-chain metric suggests that a significant number of Avalanche stakeholders are betting on a quick bullish reversal, rather than panic sell. 

Indicatively, Avalanche’s staking data tracked by StakingRewards.com shows a noticeable increase in AVAX staking this week, as price tumbled.

As depicted in the chart below, a total of 258.52 million AVAX was staked across smart contracts and validator nodes as of Jan 1. Interestingly, at press time on Jan 4 that figure has now increased to 265.57 million AVAX. 

This indicates that investors have staked an additional 7.05 million AVAX coins within the last 3 trading days. 

At the time of writing on Jan 4, Avalanche is currently trading at $47. This means that the newly-staked 7.05 million Avalanche coins are worth approximately $260.85 million. 

Typically increase staking is regarded as a bullish signal. It essentially reduces the number of coins readily available to be traded on exchanges. 

Importantly, when investors stake more coins during a price dip, it indicates that existing major stakeholders are confident that the AVAX price downturn is temporary. 

Hence, rather than panic sell in the heat of Wednesday’s 10% price correction, Avalanche investors have instead, staked their coins to tide over the bearish headwinds with passive income earned from staking.  

Additionally, increased staking on a proof of stake network like Avalanche also enhances the protocol’s efficiency and security. 

Unsurprisingly, historical trends in the staking chart show that periods of increased Avalanche staking have often been followed by an AVAX price uptrend. 

Based on the inferences draw from this on-chain analysis, AVAX price is now in prime position for a bullish reversal toward $40 in the days ahead. 

AVAX Price Forecast: The $50 Target Remains in Focus

From an on-chain perspective, there has been a signifcant drop-off in Avalanche market supply as a result of the rapid increase in Avalanche staking this week. This has, quite evidently, helped AVAX price defend the vital $35 support. 

Considering that the staking balance is still trending upwards, AVAX looks set for an imminent bullish reversal 

However, for the bulls to capitalize on this momentum, the must scale the initial resistance at $40. In affirmation of this stance, the Global In/Out of the Money chart, which depicts the historical accumulation points of the current Avalanche holders shows that the $40 area posses major resistance. 

As seen above, 96,140 addresses had acquired 10.53 million AVAX at the average price of $39.61. If some of these holders book profits at their break-even point, Avalanche price could face difficulty reclaiming $40. 

However, a decisive breakout above that range could give the momentum to push for the $40 area. 

In case of a downswing, Avalanche bulls can rely on the steady support buy-wall at the $35 area. As seen above, 515,630 holders that bought 10.53 million AVAX at the maximum price of $34.43. To avoid slipping in to losses, those investors could make short-covering purchases and possibly trigger a price rebound.