Grayscale Files AVAX ETF Update as Bearish Pressure Weighs on Price

Avalanche (AVAX) continues to hover near $12, extending its decline after dropping nearly 2% on Tuesday. Grayscale's recent filing to convert its Avalanche Trust into an ETF has drawn attention from market participants. The move has not yet spurred significant retail demand, despite the filing being seen as a potential catalyst for institutional adoption.

Derivatives data indicates increased capital inflows into AVAX futures, with open interest rising 2.04% in the last 24 hours. However, traders remain bearish, as reflected by a negative funding rate of -0.0113%. This suggests ongoing pressure for short positions, which could weigh on near-term price action.

The updated ETF filing by Grayscale shows the trust's sponsor details now list Grayscale Investments Sponsors LLC. The filing did not include details on management or staking fees, raising questions about the structure of the proposed fund. Analysts suggest the listing of an AVAX ETF on Nasdaq could offer much-needed institutional support.

Market and Technical Developments

Avalanche's price movement has shown some volatility, with the token struggling to move above $12 at press time. The RSI stands at 38, indicating continued bearish pressure. However, the MACD has shown a steady upward trend, hinting at underlying bullish momentum.

Capital inflows into AVAX derivatives have continued, with futures open interest reaching $493.12 million. This increase suggests traders are opening new positions, but the bearish sentiment remains evident from the funding rates. Traders are paying a premium to maintain short positions, which reflects cautious market sentiment.

Short-Term Price Outlook

AVAX faces a key support level at $11.18, which corresponds to the S1 Pivot Point. A break below this level could see the price fall toward the S2 Pivot Point at $8.66. On the other hand, a rebound from $11.18 could target the overhead trendline connecting the October 29 and November 11 highs, near $12.78.

Investors and traders are closely monitoring these levels, as a breakout could signal a shift in market sentiment. The technical indicators suggest that while short-term bearish pressure remains, there are signs of potential accumulation and bullish momentum in the form of the MACD and RSI movements.

Long-Term Implications

If AVAX is able to stabilize above the $12.00 level and generate a meaningful rebound, it could attract more speculative and institutional buying. The potential listing of the Grayscale AVAX ETF on Nasdaq could further enhance liquidity and investor confidence.

However, a sustained decline below $11.18 would likely trigger further selling pressure, potentially leading to a deeper correction. Analysts are watching closely for any signs of stabilization or a reversal in the current bearish trend.

What Analysts Are Watching

Market participants are keeping a close eye on the derivatives market data, particularly the funding rates and open interest levels. These metrics can provide valuable insights into the balance between bullish and bearish sentiment.

Additionally, the filing of the ETF by Grayscale is being monitored for any regulatory updates or potential approval by the SEC. A successful conversion of the trust into an ETF could provide a much-needed boost to AVAX's profile and market exposure.

Investors are also tracking network activity and whale behavior on the Avalanche blockchain. The recent surge in active addresses and total transactions could signal growing adoption and increased demand for AVAX in the long run.