AVAX holds steady above $16 but will face many challenges

Avalanche ( AVAX ) has been operating in a下行 trend since June 11. The price has fallen 26% in less than two weeks, but started to bounce back on Monday with an increase of 9.26%.

Recently, reports have shown that smart money investors are making profits and continuing to hodl AVAX. Meanwhile, retail investors are starting to take profits, and individual derivatives traders are gradually betting on short positions.

Source: IntoTheBlockOn-chain activity has started to increase significantly over the past few days. Although it has not yet reached the peak levels seen in April, this upward trend is a positive signal.

At the time of writing, the number of active addresses in 7 days has increased by 204%. If the level of activity is maintained, this could drive demand for Avalanche and support the bounce back process. Price action is also showing signs of a reversal towards an uptrend.

Does Trader AVAX continue to profit?

AVAX Price Chart | Source: TradingViewThe trading range (white) stretches from $16 to $22.9, with the midpoint of the range at $19.5. The recent fall has led AVAX to retest the bottom range – which previously acted as support in April and March.

The bulls have once again emerged victorious, and it seems that AVAX is on the rise towards the resistance zone around the range of 19.6 dollars.

However, the technical indicators still lean towards a downtrend. The Awesome Oscillator continues to show bearish momentum and the OBV (balanced volume) is below the lows of early May. This indicates that selling pressure is still dominant.

If the daily trading volume in the coming days continues to be below the average as AVAX approaches the threshold of 19.5 dollars, traders should prepare for the scenario of being rejected at the resistance area within this range.

Although the price is capped at the upper range on the daily chart and may head towards the $22.9 mark, it is also worth noting that AVAX is trading much lower than the price in December 2024.

Specifically, the drop from $54 in December to $18.1 at the time of writing represents a decline of 66.3% in just six months.

Source: IntoTheBlock The Global In/Out of the Money index shows that 65.95% of holders are currently at a loss and 27.18% are at breakeven. This means that a large number of holders are ready to exit the market when prices return to the breakeven point.

Even if Avalanche can bounce back, the number of sellers wanting to exit will still be high, as most investors are currently at a loss.

Considering the weak sentiment in the altcoin market in general, it seems that Avalanche investors should remain cautious until Bitcoin's dominance ratio falls significantly and capital flow begins to shift towards altcoins.

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