Avalanche (AVAX) open interest and derivatives volume decline, raising doubts over $21 rally

• Avalanche (AVAX) rallies over 34% in a week, nearing the $21 resistance.
• Derivatives trading has dropped, hinting at rally risks.
• However, technical analysis shows hope even as volatility rises.

Avalanche (AVAX) has recently experienced a notable price surge, capturing the attention of traders and investors alike.

The cryptocurrency rallied by 34.75% from its April 7,2025 low, reaching around $20.20, and is now approaching a critical resistance level at $21, as highlighted by market analyst Crypto Rand.

According to Rand, the $21 level is seen as a key resistance, with a potential breakout signaling a full bullish reversal for AVAX.

$AVAX at the verge of the bullish reversal, pushing on the confluence of resistances.

Breakout over the $21 range triggers the full bull reversal 💥 pic.twitter.com/WUs0OJBWR7

— Crypto Rand (@crypto_rand) April 14, 2025

Can the Avalanche price maintain its bullish momentum?

Notably, Avalanche price technical analysis points to a falling wedge breakout, a pattern typically associated with bullish reversals.

Also, fundamentally, Avalanche’s innovative smart contract capabilities and growing institutional adoption provide a strong foundation for potential price growth.

In addition, the derivatives data shows substantial liquidations, with $912.21K in the past 24 hours, split between long and short positions.

While high liquidation levels can exacerbate price volatility, making it challenging for AVAX to sustain its rally, the long/short ratio among top traders on Binance is 2.8095 for accounts and 1.4312 for positions, indicating a significant bias towards long positions.

AVAX’s derivatives market signals caution

While analysts target a $21 breakout for AVAX, data from the derivatives market is casting a shadow over this optimistic outlook.

Specifically, the trading volume for AVAX derivatives has dropped by 4.61% to $739.10 million according to data from Coinglass , and open interest has slightly decreased by 0.03% to $401.19 million.

A decline in derivatives trading volume often indicates reduced market activity, which can precede a slowdown in price momentum.

Similarly, a drop in open interest suggests that traders are closing their positions, possibly reflecting a lack of confidence in the sustainability of the current rally.

These developments raise concerns about whether AVAX can maintain its upward trajectory and successfully break through the $21 resistance level.

In summary, while AVAX has shown impressive gains and is nearing a critical resistance level, the drop in derivatives trading volume and open interest introduces uncertainty into the market.

Traders and investors should keep a close eye on the $21 resistance level; a successful breakout could confirm the bullish trend and potentially lead to further gains.

Conversely, if AVAX fails to break through and derivatives activity remains low, the price might face downward pressure.