The Avalanche price has lost momentum. The AVAX price declined to a low of $58.17, which was about 25% below the highest level in September. This drop has brought the total market capitalization of Avalanche to $13.3 billion, making it the 13th biggest cryptocurrency in the world.
Why AVAX is falling
Avalanche has declined sharply in the past few days. Notably, it has declined at a time when other cryptocurrencies are doing relatively well. For example, Bitcoin has jumped to more than $51,000 while Ethereum is comfortably above $3,500. The total market value of all cryptocurrencies tracked by CoinMarketCap has jumped to more than $2.2 trillion.
In my view, the Avalanche price has declined into a bear territory because of profit-taking. As you recall, AVAX was one of the best performing cryptocurrencies in September. As demand rose, its price surged to an all-time high. Its ranking moved from higher than 40 to a low of 11.
In most cases, investors tend to exit a financial asset after it has staged a parabolic rally. In the case of Avalanche, the price rose by more than 145% from its lowest level in September to its highest point on September 23rd.
The current decline is often known as a period of distribution. The best explanation is through what is known as the Wyckoff methodology. The methodology can be explained in the chart below.
The four-hour chart shows that the AVAX price has been in a steep sell-off in the past few days. In this period, the coin has managed to move below the 25-period and 50-period moving averages. Notably, it has also declined below the important support at $61.32, which was the lowest level on September 29th. The MACD has also moved below the neutral level.
Therefore, the coin will likely maintain the bearish trend in the near term as bears target the next key support at $50. This view will be invalidated if the price rises to $65.
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