AVAX Momentum Shift Emerges Amid Muted Trader Participation

Avalanche (AVAX) has broken through a critical multi-week resistance trendline, staging an impressive 8% rally and holding ground above the $14.00 psychological level on Thursday. Yet this spot market strength masks a troubling undercurrent: derivatives traders remain conspicuously absent, with futures open interest languishing below $600 million—a stark reminder of the leverage exodus triggered by October’s market washout.

The Leverage Drought That Won’t Go Away

Back on October 10, AVAX futures open interest plummeted from $1.45 billion to $645.54 million, draining nearly all speculative excess from the system. Months later, the market has barely clawed back. Current open interest sits at $592.81 million, a marginal daily uptick from $562.17 million that reflects classic indecision: traders are tiptoeing back into positions but refusing to commit meaningful capital until the breakout proves itself through sustained volume. This hesitation signals institutional desks are waiting for additional confirmation rather than piling in aggressively.

The contrast between rising prices and stagnant positioning is striking. While value-conscious buyers are stepping up, the broader trading community—particularly retail—remains firmly on the sidelines. The market psychology is clear: wait for validation before risking fresh capital.

Technical Framework: The $15.89 Inflection Point

The charting setup has turned decidedly constructive after AVAX cleared a descending trendline that had capped the market since mid-November. Two consecutive bullish sessions have established a foothold, but the critical test awaits.

Immediate resistance sits at the Friday session high of $14.77. Breaking this level is essential; beyond it lies the 50-day Exponential Moving Average (EMA) near $17.14—a milestone that institutional traders often interpret as a trend shift from correction to accumulation.

The Relative Strength Index (RSI) provides supporting evidence. Currently tracking at 46 and climbing steadily out of oversold territory, the RSI has formed a bullish divergence relative to the November 21 low ($12.57). This pattern frequently precedes durable reversals. Additionally, pushing through $15.89 would flip the Supertrend indicator to a buy signal, crystallizing momentum momentum evidence.

Risk Scenario: The $12.57 Floor

However, the upside is not guaranteed. Should AVAX face rejection at $14.77, the rally risks deflating entirely. A failed breakout could send prices sliding back toward the $12.57 support floor, negating recent progress and forcing bulls into defensive positioning once again. The market currently occupies a decision zone—traders must break decisively above $15.89 to confirm that the correction has truly ended.

Regulatory Wildcard: The Bitwise ETF Question

A potential catalyst lurks on the regulatory horizon. The proposed Bitwise Avalanche ETF could unlock institutional demand through a regulated channel, should SEC approval materialize. Until that clarity emerges, it remains an upside prospect rather than an immediate price driver.

For now, AVAX bulls are winning the technical argument but losing the conviction battle among active traders—a divergence that will likely persist until open interest climbs back above $700 million.