Avalanche (AVAX) has recently surged back into the cryptocurrency spotlight, attracting significant attention from whales and leveraged traders. This renewed interest is fueled by substantial long positions and positive derivatives data, painting a picture of growing confidence in the network's potential. However, technical indicators simultaneously suggest the asset might be entering overbought territory, signaling a potential short-term cooling period.
Leveraged Bets and Derivatives Stability
Major players are placing significant wagers on AVAX, with one address opening a 5x long position worth $17.2 million and another advisor initiating a 10x long valued at $2.2 million. These substantial leveraged moves underscore a rapidly building conviction among sophisticated investors. Further supporting this bullish sentiment, Avalanche's aggregated Open Interest has consistently remained above $1 billion since mid-September. Despite this increase in leveraged positioning, the average Funding Rate has stayed balanced, indicating a tilt towards long positions without an overheated market bias. This healthy balance suggests a foundational support for sustained momentum, provided spot market buyers also step in.
Overbought Signals Temper Bullish Outlook
While the bullish momentum is evident, AVAX's daily chart reveals a critical juncture. The token is currently trading near its recent highs, with the MACD line firmly indicating strong upward movement. However, the Relative Strength Index (RSI) is above 71, a classic indicator of overbought conditions. Compounding this, volume trends have begun to weaken, suggesting that the follow-through from buyers might be decelerating. This combination of strong short-term momentum and overbought signals points to a potential cooldown. Avalanche's ability to convincingly break past the $35 mark will be crucial in determining whether it can sustain its rally or faces a temporary pullback.
