Avalanche Price Analysis: 21% Crash Risk Despite Bullish Fundamentals

Avalanche price has faced brutal downward pressure in the past couple of weeks despite improving fundamentals and overall market conditions. The price began dropping on July 22 and continued throughout the Bitcoin Conference 2024, which rejuvenated the rest of the crypto market.

Most recently, the California DMV digitized 42 million car titles on the AVAX C-Chain, firmly cementing Avalanche as an optimal destination chain for RWA protocols. Despite the development, the price of AVAX dropped 3.4% over the last 24 hours to trade at $25.34.

California DMV Digitizes 42 Million Car Log Books on Avalanche

On July 31, President of Ava Labs John Wu announced that the California Department of Motor Vehicles (DMV) had digitized 42 million car log books on the Avalanche C-Chain. The move is part of an ongoing endeavor to modernize the process of car ownership transfer in the state.

1/8 🚗 The @CA_DMV has digitized 42 million titles on the Avalanche blockchain! This is a significant leap forward in modernizing public records and enhancing efficiency for all.

— John Wu 🔺 (@John1wu) July 30, 2024

What this means for Avalanche is that adoption is growing, and the RWA tokenization sector is getting actualized on the network. California, being the 5th largest economy in the world, means this partnership should automatically translate to a higher token price as AVAX is the official gas token of the C-chain.

Nevertheless, Avalanche’s price continued to slide lower, possibly due to a Bitcoin-induced market-wide dip.

Avalanche Price May Drop Further if Sell Pressure Persists

The AVAX price chart shows a downward trend since reaching a high of around $65.39, as indicated by the lower highs and lower lows. The price consistently trading below the 200-day EMA (black line) and 50-day EMA (green line) also confirms the downtrend.

The chart reveals a head-and-shoulders pattern, with the neckline around the $32.29 level. This pattern is a bearish reversal indicator, suggesting further downside. The neckline was breached and recently retested. The recent candlestick formation shows indecision, suggesting a potential consolidation phase before the next move.

The current key support level for Avalanche price is around $24, which coincides with previous lows. A break below this would pull AVAX price even lower to $20, a 21% drop from the current price. Conversely, the resistance is around $28.65 (50-day EMA) and $32.29 (200-day EMA).

The daily AVAX trading volume decreased during the slump, signaling weaker selling pressure. However, the overall bearish trend remains intact, as seen by the negative Chaikin Money Flow (CMF) at -0.07, which suggests outflows of capital. The Relative Strength Index (RSI) is at 40.77, suggesting that the market is not yet in oversold territory but is relatively close.

If the AVAX price breaks above the $32 (200-day EMA) and maintains above it, it would signal market strength, invalidating the head-and-shoulders pattern that supports the bearish thesis and turning the Avalanche price action bullish. Such a scenario may catapult AVAX to $40, which marks the next major resistance zone.

Frequently Asked Questions (FAQs)

1. Why has Avalanche's price faced downward pressure recently?

Despite improving fundamentals and overall market conditions, Avalanche's price began dropping on July 22 and continued throughout the Bitcoin Conference 2024.

2. What is the significance of the California DMV digitizing car log books on Avalanche?

On July 31, Ava Labs President John Wu revealed that the California DMV has digitized 42 million car log books on Avalanche's C-Chain, modernizing car ownership transfers and showcasing growing adoption of RWA tokenization on the network.

3. What could invalidate the bearish thesis for AVAX?

If the AVAX price breaks above the $32 (200-day EMA) and maintains above it, it would signal market strength, invalidating the head-and-shoulders pattern. This bullish scenario could potentially catapult AVAX to $40, marking the next major resistance zone.

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Evans Karanja

Evans Karanja is a crypto analyst and journalist with a deep focus on blockchain technology, cryptocurrency, and the video gaming industry. His extensive experience includes collaborating with various startups to deliver insightful and high-quality analyses that resonate with their target audiences. As an avid crypto trader and investor, Evans is passionate about the transformative potential of blockchain across diverse sectors. Outside of his professional pursuits, he enjoys playing video games and exploring scenic waterfalls.

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