Avalanche Price Struggles to Rally, But Arthur Hayes Questions Rate Cut Optimism

Avalanche (AVAX) price has entered a downward trend, mirroring broader market downturns. Other cryptocurrencies have also experienced declines in value. Notably, Bitcoin has dropped below the $58,000 mark, prompting a significant fall in major altcoins. These market movements have sparked concerns about a potential bearish period in September.

In recent days, the AVAX has experienced a notable decrease amid wider financial instability. The coin was rejected at a critical resistance level, leading to a bearish shift. It is now poised to test the lower boundary of its current triangular trading pattern.

Avalanche Price Dips as Fed Rate Cuts Stir Uncertainty

Arthur Hayes, Co-Founder of BitMEX & CIO, shared an X post elaborating on why he believes Federal Reserve rate cuts are backfiring. Despite a rate cut announcement at Jackson Hole, he noted that Bitcoin plummeted by 10%, questioning the conventional wisdom that rate cuts bolster risk assets like cryptocurrencies. 

Hayes pointed out that the reverse repo rate (RRP), which currently offers a 5.3% return, is more attractive than T-bills with less than one year of maturity. This prompts money market funds to prefer RRP, thereby reducing liquidity.

My theory on why Fed rate cuts aren’t going to plan.

Since JAYPOW annc Sept rate cut at J-Hole, $BTC down 10%, y? I thot rate cuts were good for risk assets.

RRP pays 5.3% no T-bill under 1-yr maturity pays more. MMF will move money from T-bill -> RRP which is $ liq -ve.

Since…

— Arthur Hayes (@CryptoHayes) September 2, 2024

In connection with this bearish outlook, the price of Avalanche also experienced a decline, aligning with broader market trends. Hayes predicts that as long as T-bill rates remain below the RRP, the current market dynamics will persist, affecting cryptocurrencies like AVAX. He plans to discuss this further and other impacts of Federal Reserve policies in his upcoming keynote at the KBW conference.

AVAX Price Forecast: More Bearish or Bullish Trends Ahead?

Over the past 24 hours, the Avalanche price has experienced significant price fluctuations. As of reporting time, the AVAX price hovered at $22.12, marking a decrease of 1.09%. However, according to CoinMarketCap data, the trading volume for AVAX surged by 53.62%, indicating heightened trading activity.

The Moving Average Convergence Divergence (MACD) shows that the MACD line has recently crossed below the signal line. This suggesting a bearish movement may continue in the short term. This crossover, coupled with the MACD bars transitioning from green to red, further supports the potential continuation of the downtrend.

Avalanche Price Chart| Source: TradingView

According to Coinglass data, trading activity has shown significant fluctuations recently, with the volume surging by 38% to $409 million. Despite this spike in trading volume, open interest saw a slight decrease of 0.18%, totaling $213 million. This divergence indicates a dynamic shift in trader commitments and market liquidity.

Source- Coinglass

Avalanche price prediction is at a pivotal point in its price trajectory, facing a significant resistance level of $25. Overcoming this barrier could elevate its value to $30. Continuing this positive trend, the cryptocurrency could reach $40 by the end of September. The AVAX might soar to $50 with strong bullish momentum during the next market rally.

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