The price of Avalanche’s AVAX token has fallen 11% in the past week, bucking a bullish trend in the broader cryptocurrency market. This comes amid a $365 million unlock event that increased token circulating supply by 2.6%. Experts suggest both short-term challenges and long-term opportunities for AVAX.
Unlock event causes AVAX price drop
Source: Token.Unlocks
About $303 million worth of locked tokens will be released from vesting and put into circulation on Thursday, according to Token.Unlocks data.
On February 15, a major unlock event saw 9.5 million AVAX tokens worth approximately $365 million released from the vesting period. This influx of previously locked tokens coincided with a decline in the price of AVAX, which fell from $40.32 to the current price, or nearly $37.
This is consistent with historical trends, as The Tie’s 2023 report found that large unlock events often lead to price drops within two weeks due to supply exceeding demand.
AVAX price in the red. Source: Coingecko
Analyst opinions are mixed
Despite the recent downturn, some analysts remain optimistic about AVAX’s future. While acknowledging near-term price pressure, The Tie’s report highlights increased activity on the Avalanche network, fueled by popular NFT collections such as Dreamheadz and Dokyoworld. Increasing participation within the NFT space is seen as a positive indicator of long-term adoption and potential price appreciation.
TSM @theblitzapp A subnet has now been launched where all of the platform’s premium subscriptions flow on-chain, with more features coming later in the first quarter https://t.co/dTb52vkFlw
— Avalanche 🔺 (@avax) February 5, 2024
Analysts also point to AVAX’s recent superior performance compared to certain competitors such as Celestia and Solana. This suggests resilience to unlock events and potential buying pressure despite the overall price decline. Some analysts predict that it could rise to the $40 level by the end of February, but this is still just speculation.
Avalanche (AVAX) is currently trading at $36.95. Chart: TradingView.com
Market sentiment and broader trends
It is important to remember that cryptocurrency markets are inherently volatile and the price of AVAX will be affected by a variety of factors following an unlock event.
Overall market sentiment, regulatory changes, and broader economic trends can all play a role. Investors should conduct thorough research and consider their risk tolerance before making any investment decisions.
AVAX price retreating today. Source: Coingecko
The recent unlock event has undoubtedly impacted the price of AVAX in the short term. However, analysts remain divided over the token’s future trajectory. While some predict further price declines due to increased supply, others highlight positive developments such as increased NFT activity on the network and the potential for a rebound.
Featured image from Pixabay, chart from TradingView
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