The price of Avalanche (AVAX) has tumbled to levels not seen since early 2021, following a broad market liquidation that shattered key support and left sentiment deeply bearish. On Saturday, June 6, AVAX dropped 14% to an intraday low of $6.26, its weakest point in over five years, before recovering slightly to $6.64.
This sharp decline was triggered after Bitcoin briefly dipped below the crucial $60,000 mark, dipping to nearly $59,000. This move prompted traders to slash risk as leveraged long positions were liquidated, pushing the Crypto Fear & Greed Index to 12—firmly in Extreme Fear territory. The sell-off wasn’t tied to any specific flaw in Avalanche’s network; in fact, the project had recently seen strong institutional interest, including over $1.16 billion in on-chain real-world assets and the launch of regulated AVAX futures by CME Group. However, these positives were overshadowed by a forced deleveraging cycle that saw over $1.86 billion in long liquidations across crypto derivatives, with high-beta tokens like AVAX suffering steeper losses than Bitcoin.
Derivatives data underscores the bearish tilt. Open interest in AVAX has fallen to around $159 million, indicating fewer active positions. Meanwhile, more than 70% of derivatives bets are short, suggesting the market expects further downside rather than a swift recovery. The liquidation heatmap from CoinGlass shows concentrated leverage above the current price, especially near $7.00, $7.50, and $8.00 zones. A bounce into those areas could trigger short squeezes, but spot demand remains insufficient to force such a move yet.
Analyst Dr. Chart MAZEN noted on X that AVAX still faces downside risk unless buyers reclaim higher ground. He identified a classic continuation pattern for the downside if the $8.20 area breaks, with targets near $6.53 and $5.77. Technically, AVAX has dropped close to its final major Murrey Math support near $6.25, labeled ‘Ultimate Support’ on the daily chart. The token lost the $7.81 and $7.03 support bands during the liquidation, leaving $6.25 as the key level bulls must defend. A close below that could expose the -1/8 Murrey level near $5.46, with further downside to $4.68 possible.
At press time, AVAX was trading below both its 50-day moving average at $9.15 and its 200-day moving average at $10.66, reinforcing a bearish structure. Resistance sits at $7.03, then $7.81 and $8.59. A move above $8.20 would weaken the downside setup, while reclaiming $10 would shift focus to the 200-day average. For now, a bottom is possible if buyers defend the $6.25–$6.50 range and force shorts to unwind above $7.50. However, until price breaks $8.20 with strong volume, the trend favors a damaged recovery attempt rather than a confirmed reversal.