Avalanche [AVAX] token prices fell 4.91% over the past 24 hours, marking one of the largest declines among the top 35 cryptocurrencies by market capitalization, according to CoinMarketCap data.

The price drop coincided with a rise in Open Interest — the total value of outstanding derivative positions that have not yet been settled — over recent hours, even as prices slipped below the $6.50 local support zone. The spot Cumulative Volume Delta (CVD), which measures the difference between market buying and selling volume, declined noticeably. Funding rates, the periodic fees that keep perpetual futures prices aligned with spot prices, moved into negative territory — a signal that traders were paying to hold short positions, pointing toward firmly bearish short-term market expectations.

Bulls' Struggles Center Around $7

As AMBCrypto previously reported, the altcoin's price trends were stalling despite a 20x surge in daily on-chain transactions, with the long-term trend for Avalanche pointing downward. The disconnect between rising network activity and falling token price underscores that on-chain usage alone has not translated into demand for AVAX in spot markets.

The broader market environment added further pressure. Over the past 24 hours, Bitcoin [BTC] fell below the $65,500 local support zone and was trading below $65,000 at the time of writing. As with most large-cap altcoins, AVAX has historically shown sensitivity to Bitcoin's directional moves. Continued selling in BTC could amplify bearish sentiment and push AVAX lower.

On the longer-term downtrend, a new swing low was registered at $5.68. On the 12-hour timeframe, this has produced a bearish swing structure. A bullish reversal structure would have required a break above the $7.08 swing high, which was tested in early July but not breached. The subsequent rejection drove prices lower.

Over the past two weeks, AVAX has traded in a range between $6.38 and $6.78. At press time, the support band around $6.40 appeared to have been breached, potentially accelerating the downtrend toward $6 and below in the coming days.

Derivatives Market Signals Rising Short Interest

Coinalyze data indicated that short-selling was gaining popularity. As bearish conviction builds in the derivatives market, the risk of a short squeeze — a rapid upward price move that forces short sellers to buy back positions — has increased.

The two-week AVAX liquidation map highlighted this dynamic. To the upside, the $6.70–$6.85 zone contained a dense cluster of short liquidations, which could act as a magnetic area that briefly pulls prices upward before the broader bearish trend resumes.

Summary of Key Metrics

Avalanche experienced steady spot selling, a slight uptick in Open Interest, and negative funding rates in recent trading hours — all indicators of heightened short-selling activity. The loss of the $6.50 support zone could drive prices toward and below $6.00, though the potential for a short squeeze remains a factor to monitor.