Avalanche (AVAX) has emerged as a prominent player in the crypto space, making significant strides that have caught the attention of investors and enthusiasts alike. Over the past two weeks, AVAX has flipped several established cryptocurrencies, including Bitcoin Cash (BCH), polygon (MATIC), polkadot (DOT), Tron (TRX), and Chainlink (LINK).
Avalanche registers a $9.8 billion market cap
With a market cap of $9.8 billion, AVAX has now secured a position in the top 10 cryptocurrencies, excluding Lido Staked ETH, marking its highest rank of the year. In terms of year-to-date performance, AVAX has experienced an impressive 150% jump, and the majority of this surge occurred within the last month. While Bitcoin (BTC) has also seen notable returns, with its rallies often credited for turning the broader crypto market bullish after a prolonged bearish period, Avalanche’s gains become even more apparent when comparing its performance against Bitcoin.
Among the top 30 cryptocurrencies, AVAX’s bitcoin ratio stands out as the second-best performer over the past three months, showcasing a remarkable 60% increase. Solana takes the lead in this comparison, nearly doubling its bitcoin ratio during the same period. To illustrate the significance of AVAX’s surge, consider a hypothetical crypto trader who exchanged BTC for AVAX three months ago. This trader would now have 60% more Bitcoin from that initial transaction, despite BTC’s impressive 70% rally against the US dollar during the same timeframe.
In contrast, Ethereum’s bitcoin ratio has experienced a decline of about one-fifth. While this indicates a less favorable outcome for those who traded BTC for ETH at the beginning of September, the decrease is relatively milder than Binance’s BNB, which saw a 50% reduction in its bitcoin ratio. Avalanche, akin to other layer-1 blockchains like Solana, Ethereum, Tron, and Polygon, serves as a foundation for various applications within the crypto space. These applications include stablecoins, decentralized finance (DeFi) projects, meme coins, and even Ordinal-like inscriptions.
Market dynamics and factors behind the token’s success
The intriguing question arises: why is the market favoring Avalanche? According to Vivek Raman, the head of proof of stake at BitOoda, a boutique digital asset unit, there is a broader trend at play. He notes that “alternative layer-1” networks outside of Ethereum are witnessing significant growth. Solana, for instance, has witnessed a remarkable sevenfold increase from its cycle lows, bouncing back after a 95% drop from its 2021 peak. Raman identifies Avalanche as the next major layer-1 blockchain currently undergoing a mean reversion bounce, positioning it as an outperformer in the current market dynamics.
Raman emphasizes that Ethereum (ETH) and Bitcoin (BTC), being the two major crypto assets, experienced smaller downturns compared to altcoins. Avalanche’s surge is perceived as a catch-up move within the market. Additionally, Raman highlights that Avalanche’s technology stack played a role in a recent Project Guardian pilot led by JPMorgan Onyx. Although the actual Avalanche mainnet was not utilized in the pilot, as JPMorgan experimented with a private version of the blockchain, Raman suggests that these tests could serve as a fundamental driver for the Avalanche ecosystem.
The pilot focused on exploring the potential benefits of tokenized investment portfolios, showcasing the versatility of Avalanche’s technology. Avalanche’s recent surge in the crypto market, propelling it into the top cryptocurrencies by market cap, is attributed to a broader trend of alternative layer-1 networks experiencing significant growth. The mean reversion bounce, as highlighted by Vivek Raman, indicates a catch-up move within the market, with Avalanche capitalizing on its position in the evolving crypto landscape.