Avalanche (AVAX) needed facilitate recovering its losses in this volatile cryptocurrency market. Compared to other Layer 1 (L1) blockchains, AVAX’s consolidation could be faster, raising concerns about its future performance.
Despite this uncertainty, recent price action has seen AVAX consolidating above the $19.80 support, trading at $22.11 at the time of writing and creating positive sentiment among bulls. Avalanche’s funding rate has turned positive for the first time since delayed July, with some analysts even predicting a potential change in Avalanche’s fortunes.
AVAX funding rate becomes positive
According to Coinglass DataAVAX’s funding rate has turned positive, which could signal a potential shift in market dynamics.
A positive funding rate in futures trading typically indicates increased demand for long positions as investors are willing to pay a premium to hold them. This bullish pressure suggests that more investors are betting on AVAX’s price to rise rather than fall, a notable change from the bearish sentiment that has dominated the market in recent weeks.
The current positive funding rate for AVAX indicates that bullish sentiment is gaining momentum, which could herald a breakout if bulls manage to push the price above the key $23 level.
October 2023 vs August 2024: Avalanche at a Tipping Point?
Buyers are hoping a break above $22.79 will change the weekly downward pattern, with some traders looking back to October 2023 for similarities.
Analysts like Daghan from X are predicting a trend reversal and have compared current market conditions and those in October 2023, just before Avalanche’s price surge from $8 to this year’s high of $65 on March 18.
In his comparison, Daghan explains the intensity of AVAX’s uptrends after long and deep corrections by showing how quickly the stock’s price changes after switching from a downtrend to an uptrend.
Avalanche is currently trading at $22.11 and needs to break above this key resistance level to challenge the supply zone at $22.79 and establish a novel higher high. If bulls can reclaim the $23 level, it could signal a broader market rebound for AVAX. However, if the market fails to hold above the August 5 low at $19.53, there is a risk of a move lower, potentially testing the supply below $17.50, with the next bearish target at $15.
With the funding rate signaling a possible change in market sentiment, the coming days will be crucial in determining whether AVAX will be able to break out of the current consolidation and return to an upward path.
Cover image from Unsplash, chart from Tradingview
