Avalanche (AVAX) Price Approaches a Critical Point as Market Fear Grips Investors

This perilous situation arises in the middle of a widespread market decline, which has prompted a number of digital assets to reach multi-month lows.

Avalanche (AVAX) is currently critical at a point. Its price is getting dangerously close to $20 in the middle of a broader market selloff.

This has seen a number of digital assets reach multi-month lows, with investors gradually abandoning the market. It’s leading to panic selling across the ecosystem, analysts say.

Technical Indicators Show A Concerning Picture

The recent price action of AVA shows eroding support and persistent weakness.

Since February 1, the token has been in a sustained decline after failing to sustain momentum following a challenge of the $34.40 resistance.

Technical analysis reveals that the Relative Strength Index (RSI) has entered oversold territory on daily charts, a condition which usually indicates an impending reversal.

However, the Bull Bear Power (BBP) indicator continues to exhibit negative readings, signifying that bearish forces still exert a strong influence on the market.

If this bearish strength continues, it could lead to an extended correction phase. This pessimistic outlook is further reinforced by the token’s inability to pierce its descending trendline.

Avalanche Fear Index Reaches Critical Levels

The psychology of the market has shifted to extreme caution. The crypto fear and greed index, a crucial indicator of market sentiment, has plummeged to a reading of 35, firmly placing it in the category of "fear."

This widely-followed index operates on a scale of 0 to 100, with readings below 35 indicating high levels of market anxiety. Throughout history, digital assets have encountered turning points when faced with such extreme degrees of fear.

They can sometimes present appealing starting points for contrarian investors or herald the beginning of more market selloffs as selling momentum increases.

The latter scenario may be unfolding, as there is little sign of “buy the dip” activity emerging to sustain AVA’s price, as current market behaviors suggest.

On-Chain Data Confirms Resistance Overhead

The fundamental outlook appears similarly bleak when considering on-chain metrics.

An analysis of the In/Out of Money Around Price (IOMAP) by IntoTheBlock showcases a substantial resistance zone at approximately $23.60.

At this price point, over 128,000 addresses collectively hold 3.31 million AVAX tokens—a significant psychological barrier. Currently in unrealized losses, many of these holders would seek to sell their positions as soon as it becomes viable to break even, thus generating a "sale wall".