The Ups and Downs of AVAX: An Analysis of the Recent Drop in the Cryptocurrency’s Ranking
Despite its efforts to maintain its position, Avalanche [AVAX] recently slipped out of the top 10 cryptocurrencies by market capitalization, with its market cap currently standing at $18.31 billion.
This decrease of $5 billion compared to Toncoin’s [TON] market cap played a significant role in AVAX’s drop. Over the past 24 hours, AVAX experienced a 3.93% decline, while TON surged by 15.45% to secure the 9th position.
AVAX’s recent performance marks a departure from its earlier success. Once a top performer alongside Solana [SOL], AVAX is now facing the potential for further descent in the rankings. The question remains – will it?
Is AVAX on the Verge of Recovery?
An assessment of AVAX’s potential bounce back starts with analyzing its trading volume, a key indicator of market interest in the token.
According to Santiment, AVAX’s volume has dwindled compared to its levels on March 19th, dramatically decreasing from $3.42 billion to slightly over $400 million presently.
The declining volume signals reduced interest in the token. Despite this, the token’s price might see a rebound based on the observed price trend. If the volume decline mirrors the price drop, the market’s downward momentum may weaken, potentially leading to a price recovery for AVAX.
Skepticism Looms Despite Potential Recovery
Market sentiment, as gauged by the Weighted Sentiment metric currently at -0.231, leans mostly towards pessimism regarding AVAX. Nonetheless, the cryptocurrency’s price could still rally if sentiment worsens beyond the existing negative sentiment level.
The analysis also involves assessing the Funding Rate, which reflects the cost of maintaining open positions in the derivatives market.
Presently, the positive funding suggests that the perpetual price trades notably higher than the spot price, making it costly for long-term traders to maintain their positions.
While the rising Funding Rate with AVAX’s declining price indicates an aggressive stance among long positions, the lack of accompanying rewards raises concerns for a potentially bearish trend.
If this scenario persists, a downward trend in price could be expected for AVAX in the coming days, potentially leading to further decline in market capitalization.