Ranked at number 12 in terms of value cryptocurrency in the world, Avalanche ( AVAX 3.15% ) , is a popular digital asset that is closely monitored by many investors. This Layer-1 blockchain is a key player in the decentralized finance (DeFi) sector, with its own distinctive DeFi ecosystem driven by smart contracts. The platform is experiencing significant growth and is capturing a larger market share compared to other prominent networks in this field.
Avalanche has made significant progress in technology, enabling the network to handle a high volume of transactions, reaching up to 6,500 per second. This has been achieved without compromising on security and scalability, making it an attractive choice for investors. This has led to a surge in interest from investors, evident from the increase in the value of Avalanche’s native AVAX token by 7.8% in the last 24 hours as of 2:30 p.m. ET.
The latest development has caused Avalanche’s weekly performance to enter positive territory, despite notable downward pressure on the token observed during the previous day. This selling pressure seems to have stemmed from a substantial release of tokens, as 9.54 million AVAX tokens became available in the market on August 19.
Now facing a tailwind ahead.
Similar to share issuances in the stock market, when new tokens are added to a particular cryptocurrency project, it often results in significant short-term volatility. This is because investors are uncertain whether the newly issued tokens will be immediately sold in the market. To prepare for this uncertainty, many investors opt to sell their holdings before the tokens are issued and wait for the situation to stabilize before reinvesting.
Avalanche experienced the unlocking of 9.54 million tokens in the market, resulting in a circulating supply of approximately 395.4 million tokens. This unlocking led to an overall inflation rate of about 2.4%. The positive recovery of Avalanche, especially when the general market is stable, is a promising development.
Many people now feel comfortable reinstating positions that they had previously closed after this announcement, leading to a decrease in selling pressure overall.
Should I invest in Avalanche?
An important update shared by the Avalanche team regarding the token unlock is that no more tokens will be given to the team and strategic partners after this event. Instead, any tokens that are still subject to vesting will be transferred to the Avalanche Foundation to fund growth and development projects. This decision is beneficial for investors worried about the devaluation of their holdings, as it reduces the possibility of additional tokens flooding the market through future sales.
It seems that many people in the market believed that insiders who received these tokens early on would sell them quickly. While some insiders did sell, the fact that there hasn’t been much selling activity in the market suggests that insiders may plan to hold onto their tokens for a long time. If this is true, it could be a positive indicator for the crypto project, especially considering its decline in the crypto market rankings since reaching its peak.
In my opinion, Avalanche stands out as one of the most fascinating projects currently, and I intend to closely monitor its developments in the upcoming days after this recent development.
