Will AVAX continue its decline amid weak derivatives?

Avalanche (AVAX) is down 3% in the last 24 hours, making it one of the worst performers among the top 30 cryptocurrencies by market cap.

It is trading below $9.30 on Thursday after being rejected at the key resistance zone the previous day. 

The broader market turned bearish a few hours ago as Iran opened fire on three ships in the Strait of Hormuz, with the United States maintaining a blockade. 

Meanwhile, the bearish sentiment strengthens as AVAX’s institutional demand remains muted and as derivatives metrics weaken. 

The Middle East weighs on the market sentiment

Bitcoin, XRP, ETH, and AVAX are all in the red after Iran fired on three ships in the Strait of Hormuz and escorted two of them to Iranian waters.

According to the Wall Street Journal, the attacks came a day after US President Donald Trump extended a ceasefire while maintaining an American blockade of Iranian ports.

The tension dampened short-term risk sentiment, with risk-sensitive assets such as Bitcoin (BTC) and AVAX pausing their rally and recording losses over the past few hours. 

AVAX’s institutional demand remains muted

AVAX is down by 3% in the last 24 hours as institutional demand for the cryptocurrency remained muted so far this week.

Data obtained from SoSoValue shows that spot AVAX Exchange Traded Funds (ETFs) have remained silent so far this week, following a $5.26 million inflow last week.

The lack of activity suggests that institutional investors do not want to increase exposure to AVAX amid growing uncertainty in the Middle East. 

Furthermore, Avalanche’s long-to-short ratio reads 0.84 on Thursday, nearing the lowest level over a month.

A ratio below one indicates a bearish sentiment in the market, as traders are betting the asset’s price will fall.

CoinGlass data also shows that AVAX’s funding rates support a bearish thesis.

The OI-Weighted Funding Rate data for Avalanche flipped negative on Thursday, reading -0.0054%.

This indicates that shorts are paying the longs and projecting a bearish outlook.

Avalanche price forecast

AVAX is trading at $9.33 on Thursday, maintaining a bearish near-term bias. Avalanche’s price is currently below all the key Exponential Moving Averages (EMAs).

 The 50-day EMA at $9.41, together with the 100-day EMA at $10.36 and the 200-day EMA at $13.15 provide strong resistance for Avalanche in the near to medium term. 

Momentum is mixed but not yet supportive of a bullish turn.

The Relative Strength Index (RSI) on the 4-hour chart is hovering just above the neutral 50 mark, and the Moving Average Convergence Divergence (MACD) indicator is slipping marginally back into negative territory.

If the bulls regain control, they would encounter initial resistance at the 23.6% Fibonacci retracement of the latest swing at $9.29, closely followed by the 50-day EMA at $9.41.

A daily candle close above this level would be needed to ease immediate downside pressure and open the way toward the 100-day EMA near $10.37. 

On the flipside, the nearest support level is at the $8.39 area, where buyers previously emerged.

A sustainable dip below this level would likely expose the prior cycle low region and reinforce the broader bearish structure.