After 95% Crash, Avalanche Forms High-Timeframe Reversal Structure

Overview

Avalanche has experienced a significant price decline, falling over 95% from its peak in 2021. Recently, signs have emerged suggesting a potential reversal in its long-term trend, as the asset stabilizes at macro support levels and begins to form an Elliott Wave structure on the weekly chart.

Current Situation

Avalanche is exhibiting early indications of a high-timeframe reversal. The asset is currently operating within a descending channel that has persisted since its all-time high in 2021. The broader structure indicates that the asset remains within a long-term corrective phase, yet recent technical signals hint at a possible inflection point in this broader cycle.

According to analysis, Avalanche appears to have completed Wave 1 of the Elliott Wave structure, with a macro low identified near a specific price point. The asset is now entering the early stages of a Wave 2 recovery phase. This phase is crucial, as it often determines whether a sustainable expansion can follow.

On the weekly chart, several developments are noteworthy. Wave 1 seems to have concluded within a designated macro bottoming zone, potentially establishing a base of support. Despite the ongoing long-term downtrend, the price action has shown a classic deviation setup, characterized by a bearish breakdown followed by a retest of the lower trendline.

Additionally, Avalanche has executed a liquidity sweep into a specified demand zone, indicating increased buying interest. The fractal structure also resembles the compression phase observed in the previous cycle before a significant expansion occurred. For further confirmation of the bullish outlook, sustained strength and price expansion toward mid-channel resistance are required. A decisive movement in this direction would reinforce the bullish Wave 2 narrative and indicate that a larger recovery structure is beginning to take shape.

From author

The recent developments in Avalanche’s price action are significant for both traders and long-term investors. The potential reversal structure indicates that the market may be shifting, providing opportunities for accumulation. However, it is essential to monitor key support levels closely, as they will dictate the overall trend and recovery potential.

Impact on the crypto market

• Avalanche’s potential reversal could influence broader market sentiment, especially among altcoins that have also faced significant drawdowns.
• A successful Wave 2 recovery could attract more investors to the asset, increasing trading volume and market interest.
• The technical developments in Avalanche may serve as a blueprint for other cryptocurrencies experiencing similar patterns after prolonged downtrends.
• If Avalanche maintains key support levels, it could signal a broader market recovery, encouraging risk-on behavior from investors.
• Conversely, failure to hold critical support may lead to increased bearish sentiment, impacting other assets within the crypto market.