Key Insights:
- Avalanche (AVAX) price has remained sandwiched below the $47 mark over the last 3-days, raising questions about its short-term bullish prospects.
- The Aggregate Exchange Order Books chart shows that AVAX Sell orders currently exceed Buy orders, indicating an ongoing profit-taking wave.
- Avalanche Trading Volume has averaged $1.44 billion over the past week, 30% higher than last month’s peak, suggesting the market demand remains steady.
Avalanche (AVAX) opening price for Wednesday, December 27, stood at $43, a 12% decline since rejecting $50 last week. Mounting sell orders and the flat price action over the past week raise questions about AVAX’s short-term bullish prospects.
Can Avalanche attract sufficient demand to prevent a downswing below $40 and launch a $50 retest?
Investors Taking Profits Have Mounted Orders to Sell 3 Million AVAX Coins
Avalanche price skyrocketed to a 19-month peak of $50 on christmas eve, racking up year gains in excess of 363%. The rejection at the $50 psychological resistance appears triggered a profit-taking wave, sending AVAX price wobbling toward the $43 area within an eventful 72 hours.
On-chain data reveals that investors booking profits have been a major factor AVAX price currently struggles to getting the rally back on track.
As things stand, Avalanche traders have placed active orders to SELL 3.06 million AVAX coins, as per the latest data from the Aggregate order books of crypto 10 prominent crypto exchanges including Binance and Coinbase.
Worryingly, the current active buy orders stand at 2.6 million AVAX, signalling an excess market supply of over 400,000 AVAX.
The aggregate order books chart depicts the total number of buy/sell order currently listed for a particular cryptocurrency across exchange and trading platforms.
When the SELL/Ask side on the right mounts higher than the BUY/Bid side on the left, as observed above it is interpreted as bearish signal. It shows that the number of AVAX coins currently listed for sale has exceeded the current market demand.
Typically, excess supply for any asset often leads to a price decline as sellers begin competing to get their orders filled quicker.
Although the overall sentiment surround AVAX remains firmly bullish, this profit-taking trend could hamper the price rally in the short-term.
Can Price Avalanche Stay Above $40 ?
The 12% AVAX price correction recorded in the last 72 hours has raises questions about Avalanche’s bullish prospects among short-term swing traders. However, a close look at the recent market trends reveal steady liquidity.
As depicted below, Avalanche Trading Volume has averaged $1.44 billion over the past week, 30% higher than last month’s peak, suggesting the market demand and liquidity remains steady.
Trading Volume metric depicts the dollar value of all AVAX transactions executed within a specific time frame. It serves as a crucial indicator of market activity, liquidity, overall investor interest.
Given that the current AVAX trading volume is still significant healthy, it signials that investor sentiment is still dominantly bullish. Furthermore, the high liquidity in the markets, can enable those looking to take profits execute their trades at favorable prices without triggering major downswings.
These factors suggest that AVAX is likely to hold-up above the $40 support level in the short-term, even amid the profit-taking wave. In effect, Avalanche can launch another attempt at the $50 territory once the market momentum flips bullish.
