Avalanche (AVAX) has seen a notable surge in price recently, benefiting from broader market bullish cues. However, the altcoin now faces a potential bearish event that could impact its price dynamics in the coming days.
The upcoming token unlock could increase the circulating supply, potentially causing price fluctuations.
Avalanche Awaits Token Unlock
In the next 24 hours, Avalanche will experience its first token unlock in nearly three months, releasing 1.67 million AVAX tokens into the market. This unlock is considered a bearish event because the sudden increase in supply could outpace demand, putting downward pressure on the price.
This $42.85 million unlock could affect the price of AVAX by overwhelming the market with additional supply. As a result, the altcoin could face difficulty maintaining its recent upward momentum. The timing of this event, following a period of price gains, suggests that AVAX may experience heightened volatility.
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Despite the concerns over the token unlock, technical indicators for AVAX show potential for continued bullish momentum. The Relative Strength Index (RSI) has recently shown an uptick, sitting comfortably above the neutral mark of 50.0.
The RSI’s position in the bullish zone signals that AVAX has the capacity to resist downward pressure. As a result, it could continue to push upward if market conditions remain favorable.
AVAX Price Pushes Further
At the time of writing, AVAX is trading at $25.6, having risen by 12.7% in the last 24 hours. The altcoin seems to be targeting the $26.1 resistance, which has kept AVAX from advancing for over a month. Breaking this resistance is crucial for the continuation of the uptrend.
However, the altcoin may struggle to breach this key resistance and could continue consolidating under $26.1. The supply pressure from the upcoming token unlock could limit the price action, with AVAX likely holding above $24.9. If the token unlock’s impact is mild, the price may stabilize at this level.
On the other hand, if the unlock causes a stronger bearish reaction, AVAX could fall below the $24.9 support level. A further decline could lead to a drop to $23.9 or lower, potentially reaching $22.4. Such a drop would invalidate the neutral thesis, signaling a shift in sentiment and market correction for AVAX.
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Source: https://beincrypto.com/avalanche-token-unlock-trigger-avax-price-drop/