Avalanche price has dropped to a crucial support level and created an early bullish signal, pointing to a potential rebound.
Avalanche (AVAX) has crashed to the important support level at $20, down by over 65% from its highest level in December.
The recent decline has largely been driven by the overall performance of the crypto and stock markets as risk sentiment worsens. Bitcoin (BTC) and most altcoins have slipped into a technical bear market this year.
Two major risks currently weighing on markets are Donald Trump’s proposed tariffs and growing fears that the artificial intelligence bubble is beginning to burst.
At the same time, Avalanche has been steadily losing market share to newer layer-1 projects like Berachain, Base, Arbitrum, and Sui. Its total value locked stands at $1.66 billion which is significantly lower than Berachain’s $3.1 billion and Base’s $2.95 billion. At its peak, Avalanche had over $12 billion in assets.
Additional network data shows that Avalanche’s app revenue has deteriorated in recent months. The network generated just $430,000 in March, down sharply from a peak of $52 million in December 2023.
Still, Avalanche has made some notable positive headlines. On Monday, it was selected by Sumitomo Mitsui Financial Group, Japan’s second-largest bank, to provide the blockchain infrastructure for its upcoming stablecoin.
There are also hopes that the Securities and Exchange Commission will approve a spot AVAX ETF. If approved, the fund would give U.S. investors exposure to AVAX. However, it remains unclear whether investor interest will follow, as recent inflow data shows a strong preference for spot Bitcoin ETFs.
Avalanche price technical analysis
The weekly chart shows that AVAX has dropped to the key psychological level at $20. This is a notable support zone, as it held in September last year and triggered a 195% rebound.
Avalanche has formed a falling wedge pattern, a popular bullish reversal signal. This formation features two descending, converging trendlines and often precedes a breakout to the upside. If that occurs, the next resistance to watch will be at $30.
However, a decisive break below the $20 support would signal further downside, with the next major support at $9, its lowest point in 2023.
