AVAX Price Crashes to Support in Early 2021, Is a Bottom Forming?

AVAX price collapsed to levels last seen in early 2021 after a market-wide sell-off wiped out support near $8 and left traders heavily bearish.

According to data from crypto.news, Avalanche (AVAX) fell 14% to an intraday low of $6.26 on Saturday, June 6, its lowest level since January 2021, before settling at $6.64 at press time.

The sharp decline came after Bitcoin (BTC) briefly fell below the key $60,000 support level and touched near $59,000, prompting traders to reduce risk as leveraged long positions were liquidated, and the Crypto Fear & Greed Index fell to 12 and remained in extreme fear territory, highlighting deteriorating sentiment in the digital asset market.

Leverage leaves AVAX near range in early 2021

This decision was not driven by a clear network outage specific to Avalanche. Prior to the sale, Avalanche had seen stronger institutional and on-chain activity, including over $1.16 billion in real on-chain assets and the launch of AVAX futures regulated by CME Group.

These developments offered little protection once the market entered a forced deleveraging cycle. Additional context showed over $1.86 billion in long liquidations across crypto derivatives, with high-beta layer 1 tokens such as AVAX absorbing larger losses than Bitcoin.

The positioning of derivative products has also weakened. Open interest for AVAX fell to around $159 million, showing that fewer traders were willing to keep their capital in active positions during the decline. At the same time, more than 70% of positions were short, leaving the market headed for further decline rather than a rapid recovery.

CoinGlass liquidation heatmap data shows significant leverage above the current price, particularly around $7.00, $7.50, $8.00, $8.50 and in the $8.80 to $9.20 area. A rebound to these levels could trigger short selloffs, but current price action has not yet shown enough spot demand to force this squeeze.

According to an earlier article by analyst Dr. Chart MAZEN, AVAX still carries risk of further declines unless buyers return to higher levels. “I have a classic continuation pattern for the downside on a break of the $8.20 area,” the analyst wrote, adding that he was watching “6.53” and “5.77” as lower areas.

Technical setup keeps the bottom case flimsy

AVAX fell near its last major support area of ​​Murrey Math near $6.25 earlier today, a level called “Ultimate Support” on the daily chart. The token had previously lost the $7.81 and $7.03 support bands during the liquidation-driven sell-off, leaving the $6.25 area as the key line that bulls must defend to avoid a deeper decline towards the oversold region near $5.46.

At press time, AVAX was trading below the 50-day moving average at $9.15 and the 200-day moving average at $10.66.

Reclaiming these levels would be necessary to restore a bullish market structure, although the token’s defense of the $6.25 support zone has begun to attract the attention of traders looking for signs of a longer-term bottom.

Resistance now lies near $7.03, followed by $7.81 and $8.59. A close above $8.20 would weaken the downward continuation pattern outlined by Dr. Chart MAZEN, while a stronger move above $10 would bring the 200-day average and major trend resistance back into focus.

Downside risk remains evident. A daily close below $6.25 would keep sellers in control and expose AVAX to the -1/8 Murrey level near $5.46. Below this figure, the next major bearish zone lies near $4.68, while the Dr. Chart MAZEN level of $5.77 could serve as an initial test before a deeper capitulation.

AVAX may still form a bottom if buyers defend the $6.25-$6.50 range and force shorts to unwind above $7.50. Until price recovers $8.20 with heavy volume, the chart favors a damaged recovery attempt rather than a confirmed reversal.