Avalanche (AVAX) has emerged among the worst-performing cryptocurrencies one of the top-ranking tokens within the last 24 hrs, partly because of fears linked to Terra (LUNA) and it is an almost-dead UST algorithmic stablecoin project.
Avalanche cost dips among Terra’s tax evasion FUD
AVAX’s cost stepped by nearly 14% between May 18, where it traded near $35 to May 19 once the cost dipped to $28.50. The dip coincided having a South Korean news agency report that claims Terraforms Labs, the developer from the Terra blockchain, owes 100 billion won (roughly $78.5 million) towards the regional tax agency.
#Terra owes $78.5M in taxes to South Korea’s government
— Market Rebellion (@MarketRebels) May 18, 2022
This news came 72 hours after Luna Foundation Guard (LFG), a nonprofit subsidiary of TerraForms, revealed it had around 1.97 million AVAX tokens (worth $58.39 million at May 19’s cost) within the reserves which were designed to back its benchmark UST stablecoin.
Within the same pool, LFG also holds Bitcoin (BTC), Binance Gold coin (BNB) and LUNA. The firm had earlier offered a large amount of their holdings to shore up UST’s value following its “depeg” from the U.S. dollar.
Interestingly, LFG hasn’t offered any AVAX, nevertheless, the panic round the Terra fiasco motivated the Avalanche token to plunge by nearly 50% month-to-date, together with a 30% intraday decline on May 11.
Technical analysis projects further downside for AVAX
Theoretically speaking, AVAX’s cost could fall by another 40% in May because it breaks from its prevailing bearish continuation setup.
Dubbed “bear pennant,” the pattern seems once the cost consolidates in the range—defined with a falling upper trendline along with a rising lower trendline—after a powerful move downward. It resolves following the cost breaks underneath the lower trendline and, usually of technical analysis, falls up to the flagpole from the previous downtrend.
The bear pennant setup puts AVAX on the way to around $17 in May, lower about 40% from May 19’s cost.
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