Avalanche (AVAX) Faces Bearish Pressure as Key Support Crumbles

Avalanche (AVAX) has emerged as one of the most significant losers among the top cryptocurrencies, recording a nearly 5% drop within a 24-hour window. This downward momentum follows a broader market retreat, primarily triggered by Bitcoin’s struggle to maintain its own support levels. With short-term expectations firmly bearish, AVAX investors are closely watching technical indicators that suggest the path of least resistance remains to the downside.

Market Sentiment and Technical Breakdown

The recent price action has seen AVAX slip below the vital $6.50 local support zone, a move accompanied by a noticeable decline in spot Cumulative Volume Delta (CVD). Interestingly, while prices fell, Open Interest increased and funding rates turned negative, signaling that traders are aggressively betting against the asset. This bearish conviction is further fueled by the long-term downward trend, which remains intact despite previous attempts by bulls to break the $7 resistance level.

The Outlook: Potential Liquidation Risks

As the market eyes the $6.00 mark and the previous swing low of $5.68, the current structure suggests an acceleration of the downtrend. However, data from liquidation maps indicates a dense cluster of short positions between $6.70 and $6.85. This creates a "magnetic zone" that could trigger a sudden, brief price spike—a short squeeze—before the bearish trend continues. Traders are currently advised to maintain a bearish bias while remaining wary of localized volatility that could wipe out over-leveraged positions.