AVAX price crashes to early 2021 support, bottom forming?

$AVAX price crashed to levels last seen in early 2021 after a market-wide liquidation wave erased support near $8 and left traders heavily bearish, because nothing says "happy weekend" like a 14% flush. According to data from crypto.news, Avalanche ($AVAX) fell 14% to an intraday low of $6.26 on Saturday, June 6, its lowest level since January 2021, before stabilizing at $6.64 at press time. The sharp decline came after Bitcoin (BTC) briefly fell below the key $60,000 support level and touched nearly $59,000, prompting traders to reduce risk as leveraged long positions were liquidated, and the Crypto Fear & Greed Index fell to 12 and remained in Extreme Fear territory, underscoring the deteriorating sentiment across the digital asset market.

The move was not driven by a clear Avalanche-specific network failure, which at least spares the team a postmortem this time. Before the selloff, Avalanche had seen stronger institutional and on-chain activity, including more than $1.16 billion in on-chain real-world assets and the launch of regulated $AVAX futures by CME Group. Those developments offered little protection once the market entered a forced deleveraging cycle, a reminder that fundamentals, sadly, do not pause liquidations.

The additional context showed more than $1.86 billion in long liquidations across crypto derivatives, with high-beta layer-1 tokens such as $AVAX absorbing sharper losses than Bitcoin. Derivatives positioning also weakened. Open interest in $AVAX fell to about $159 million, showing fewer traders were willing to keep capital in active positions during the decline. At the same time, more than 70% of positions were shorts, leaving the market tilted toward further downside rather than a fast recovery, which is the chart equivalent of everyone betting on the same horse.

CoinGlass liquidation heatmap data shows heavy leverage above the current price, especially around $7.00, $7.50, $8.00, $8.50, and the $8.80–$9.20 zone. A rebound into those levels could trigger short liquidations, but current price action has not yet shown enough spot demand to force that squeeze, so the gasoline is there, but nobody has lit a match.

According to an earlier X post by analyst Dr. Chart MAZEN, $AVAX still carries downside continuation risk unless buyers reclaim higher levels. "I have a classic continuation pattern for the downside in case the 8.20$ area breaks," the analyst wrote, adding that he was watching "6.53" and "5.77" as lower areas, with all the optimism of someone reading an EKG flatline.

$AVAX fell close to its final major Murrey Math support zone near $6.25 earlier today, a level labeled 'Ultimate Support' on the daily chart, which sounds reassuring until you remember what "ultimate" usually precedes. The token previously lost the $7.81 and $7.03 support bands during the liquidation-driven selloff, leaving the $6.25 area as the key line bulls must defend to prevent a deeper decline toward the oversold region near $5.46.

At press time, $AVAX was trading below both the 50-day moving average at $9.15 and the 200-day moving average at $10.66, a setup the chart community politely calls "ugly." Reclaiming those levels would be necessary to restore a bullish market structure, although the token's defense of the $6.25 support zone has begun attracting attention from traders looking for signs of a longer-term bottom.

Resistance now sits near $7.03, followed by $7.81 and $8.59. A close above $8.20 would weaken the downside continuation setup described by Dr. Chart MAZEN, while a stronger move above $10 would bring the 200-day average and major trend resistance back into focus, a journey that currently requires more hopium than spot demand.

Downside risk remains clear, as it tends to do in capitulation. A daily close below $6.25 would keep sellers in control and expose $AVAX to the -1/8 Murrey level near $5.46. Below that, the next major downside area sits near $4.68, while Dr. Chart MAZEN's $5.77 level may act as the first test before deeper capitulation, which is a polite word for "ouch."

$AVAX can still form a bottom if buyers defend the $6.25–$6.50 range and force shorts to unwind above $7.50. Until price reclaims $8.20 with strong volume, the chart favors a damaged recovery attempt rather than a confirmed reversal, which is the technical-analysis equivalent of "we'll see."