Avalanche (AVAX) Plummets 13.49% This Week Amid SEC ETF Delay

Avalanche (AVAX) has experienced a significant decline, dropping 13.49% this week to $20.07, which marks a new low for the month, nearing the critical support level of $15.28 established in March. This downward trend is further supported by a 6.82% decrease in DeFi TVL and a net outflow of $2.47 million on May 31, indicating a strong risk-off behavior among investors.

The recent delay by the SEC in deciding on Grayscale’s AVAX ETF until July 15 has had a notable impact on market sentiment. This delay, which came shortly after VanEck launched an institutional fund for Avalanche, has shaken investor confidence and dampened the optimism surrounding potential institutional interest. This sentiment is not unique to Avalanche; Cardano (ADA) also experienced drawdowns due to similar ETF indecision, highlighting the broader impact of regulatory delays on layer-1 ecosystems.

Technical analysis reveals a breakdown from a descending triangle pattern in the daily AVAXUSD chart. The price has been forming lower highs since April, compressing toward the $21 support base, which has now given way. The bearish continuation is confirmed by rising sell volume and the failure to defend the $20.50 level. If the price breaks below $19.50, the next significant support level will be $15.28. The descending triangle pattern indicates lower highs, and unless the price reclaims $22.30, every rally remains suspect. Additionally, AVAX is currently under all major EMAs, with the 20-day EMA at $22.55, 50-day at $22.18, 100-day at $23.15, and 200-day at $25.55, forming a full bearish EMA stack that reinforces downside pressure.

Momentum indicators further support the bearish outlook. The RSI is at 39.79, indicating clear bearish momentum. The MACD histogram has deepened into red territory, with both the MACD and signal lines declining further apart, strengthening the downside confirmation. The Bull-Bear Power (BBP) indicator has dropped to -4.44, its lowest level since April, highlighting that sellers have completely overwhelmed any bullish strength, reinforcing that the current move is part of a sustained bearish trend.

On-chain trends also signal persistent weakness. Avalanche’s DeFi TVL dropped from $1.581 billion on May 28 to $1.473 billion by May 31, reflecting a $108 million erosion in just three days. This capital flight and reduced protocol engagement are further supported by exchange activity, with net outflows reaching $4.34 million over May 30–31, showing consistent user exits. More than 90% of AVAX holders are now underwater, with only 3.93% in profit, highlighting the risk-off sentiment and increasing the likelihood of further capitulation if support levels break.

In conclusion, AVAX has breached its February low and is heading toward March’s $15.28 level, confirming a bearish structure with potential continuation unless strong buyer interest emerges. The full bearish EMA alignment and momentum indicators continue to support downside pressure. If $19.50 fails to hold, AVAX could test $15.28 in the short term. Given the ETF delays and heavy holder losses, the bearish trend may persist well into mid-June unless market structure flips decisively bullish.