Market motivation is falling: Open contracts are plummeting, AVAX is facing the risk of a deep fall.

As of the time of writing this article on Wednesday, Avalanche (AVAX) is trading in the green with an increase of nearly 1%, while this coin continues to test the important support zone that has been maintained steadily for over two months. However, the short-term outlook for AVAX is not very optimistic: open interest (OI) in the derivatives market has fallen to the lowest level in the past 30 days, and technical indicators are currently signaling a deeper correction — which could even drop to the lowest price zone since the beginning of the year.

Increasing negative sentiment in the AVAX derivatives market

According to data from Coinglass, the open contract (OI) of AVAX has fallen to 441 million USD, marking a decline of more than 3% in the last 24 hours – the lowest level in the past 30 days. This trend reflects that capital continues to flow out of the derivative market of AVAX amid a clear weakening of buying power.

The gloomy market sentiment caused the long positions worth 1.4 million USD to be liquidated within 24 hours, while the short positions were only liquidated at 86,000 USD. This indicates that most investors betting on the bullish trend have had to cut losses, giving way to the bears gaining dominance. At the same time, the Long/Short ratio decreased to 0.9451 – indicating that selling pressure is overshadowing buying power.

AVAX derivative market data | Source: CoinglassThe funding rate also reflects the struggle of sentiment as it fluctuates around the neutral threshold. However, the latest figure recorded a level of 0.0022%, revealing the first positive signals from short term demand.

! avax-giamFunding rate of AVAX | Source: CoinglassHowever, the mainstream trend is still in favor of the bears, as shown by negative indicators from the derivatives market. This suggests that AVAX may continue to face corrective risks if there is not strong enough buying to reverse the situation.

AVAX is at risk of falling to the zone of 16 USD

At the current time, AVAX is still holding strong at the important support level of $18.50 – coinciding with the bottom established on April 16 – after slightly bouncing from the low of $18.13 recorded on Tuesday. However, the price action in recent sessions continues to reflect strong selling pressure, clearly shown through the long wick candles – a sign that the bulls are losing ground against the selling force.

If AVAX cannot maintain the zone of $18.50 and closes below this level, it is highly likely that the downtrend will continue, bringing the price to the next support zone at $16.14, and it may even retest the yearly low at the level of $14.66.

AVAX/USDT Daily Chart | Source: TradingViewThe technical indicators on the daily frame are reinforcing the negative scenario. The MACD line remains below the signal line and has not shown signs of crossing upwards, indicating that the downtrend shows no signs of weakening. At the same time, the red histogram is increasingly expanding below the 0 line – indicating that selling pressure is becoming increasingly strong.

The relative strength index (RSI) is currently at 38 – just above the oversold zone, but still well below the average threshold of 50, indicating that bearish pressure remains present. This further reinforces the possibility that AVAX will continue its downward trend in the short term.

Typically, when the RSI reaches the oversold threshold, the market tends to reverse upward. However, if AVAX continues to move sideways and accumulate around this zone, the correction may last longer than expected.

In a positive scenario, if the overall market gradually stabilizes and AVAX bounces back from the important support level at $18.50, this altcoin could open up recovery opportunities, aiming towards the 50-day exponential moving average (EMA) around the $21.11 mark.

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