Avalanche has been climbing the leaderboard since the start of the year, following the broader crypto market rally as the major cryptocurrencies discovery crucial resistors. But right now, its native AVAX token seems to have hit a new high.
According to Coingecko, AVAX is down 10% on the daily time frame, ranking as one of the biggest losers as of today, January 25. This has led to speculation that the Avalanche’s most recent rally, which was sparked by associations with Amazon Web Services and with alibaba it was just an event called “buy the rumor, sell the news.”
The saying “buy the rumor, sell the news” describes a common trading technique in which investors buy a security based on rumors about an impending news or data announcement, and then sell the asset once the news is out. .
This could give the trader the opportunity to buy the security before everyone else so they can sell it at a profit when demand and price rise.
Image: CoinCentral
External and internal forces influence AVAX
Although on-chain developments have been particularly bullish, external market forces appear to be the dominant force for token slippage at present. At the time of writing, Bitcoin Y Ethereal they have approached their respective resistances with no headway being made by the bulls of the two cryptocurrencies.
But with recent developments like the ecosystem camaraderie with Canadian e-commerce company Shopify, we could see Avalanche become more mainstream as Shopify consumers become more familiar with the ecosystem.
However, recent News shows that on-chain metrics have not improved since the announcement of the partnerships. The validator count is still around 1200 since then. The DeFi realm does not show promise for Avalanche either.
Image: DefiLlama
According to defillama, the total value locked in the ecosystem decreased by 3% since yesterday. This may be a sign of a slight loss of investor confidence, as investors may have felt misled by recent market moves.
At $16.96, what’s in store for investors?
Investors are somewhat bearish due to the recent rejection at $19. According to CoinGlass Datashort sellers outnumber long buyers by a significant margin, adding to the overall bearish weight of the situation.
Image: Coinglass
If the token continues to worsen and closes below $16.85 today, we could see the bears retest the $15.74 support range. However, on-chain developments should be able to keep up with current market sentiment.
With the token’s high correlation to Bitcoin and Ethereum, investors and traders should also monitor the price movements of these coins. At the time of writing, the bears in the BTC market are retesting the $22,661 support with ETH retesting the $1,520 support at the same time.
AVAX total market cap at $5.4 billion on the daily chart | Chart: TradingView.com
For now, AVAX long holders should prepare for the short to medium term as the bears try to work their way into the position. AVAX bulls should also try to consolidate above its support, as this would allow the token a solid platform to break above the $19 resistance.
-Featured Image by TD Ameritrade
