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Avalanche’s AVAX tanks before $365M token unlock – What went wrong?

TL;DR

  • Avalanche’s native token, AVAX, underperformed the crypto market over the past week prior to its token unlocking event.
  • In crypto, significant unlocking events typically result in price drops as the token’s supply grows more than investor demand.
  • February is expected to be a hot month for crypto assets, with many cryptocurrencies unlocking assets totaling more than $800 million. 

Avalanche’s native cryptocurrency, AVAX, has experienced underperformance in the market leading up to a significant event: the unlocking of $365 million worth of tokens. This unlocking event has garnered attention due to its potential impact on AVAX’s price and market dynamics. 

Historically, such large unlocking events in the crypto space often coincide with price declines, as the increased supply of tokens can outweigh demand, resulting in downward pressure on prices.

Avalanche’s AVAX disappoints investors pre-unlock

The Avalanche (AVAX) network’s native cryptocurrency lagged behind most digital assets this week as the token undergoes a $365 million unlocking event, increasing its supply.

At the time of writing, Avalanche (AVAX) is trading at $37.96, down 0.5% from an hour ago and 3.3% from yesterday. AVAX’s value today is 4.2% lower than it was seven days ago.

According to Token.Unlocks, around 9.5 million previously locked-up Avalanche tokens worth $365 million will be released on Thursday, increasing the asset’s circulation supply by roughly 2.6%.

Approximately 4.5 million Avalanche tokens will be distributed to team members, 2.25 million to strategic partners, 1.67 million to the ecosystem development foundation, and 1.13 million for airdrop.

On-chain data indicates that approximately 58% of AVAX’s tokens have been unlocked. Token unlocks result in an increase in the asset’s supply, freeing previously locked-up coins from a vesting period, including for early investors.

Token Unlocks cause markets to tank

Arbitrum (ARB) and Avalanche (AVAX) have seen significant bearish pressure as investors prepare for upcoming token unlocks. The recent price declines of both projects indicate that they are under selling pressure.

Arbitrum arose as a network where developers can work together to create applications that are not only accessible and practicable but also economically viable and offer faster transactions than Ethereum. Arbitrum recently had a significant sell-off as investors braced for the approaching token release in March.

Over $1 billion in ARB tokens are scheduled to be unlocked starting March 16. This selling pressure will significantly reduce the project’s market worth.

This price decrease mirrored the downward trend of certain emerging altcoins, which recently hit a year-to-date all-time low as the Bitcoin search trend reached a bear market bottom. ARB whales have been selling their shares, leaving ARB vulnerable.

As a result of these market conditions, investors are now turning to Algotech ALGT for its attractive investment options.

Algotech (ALGT) intends to use technology and machine intelligence to revolutionize decentralized finance. Among the platform’s many qualities, investors prefer its creative features such as momentum trading, mean reversion, and optimized algorithms. 

Algotech’s features will allow users to experience smooth market performance. The platform’s goal is to provide customers with smart and effective data management tools through the use of artificial intelligence and modern technologies.

Top token unlocks in February 2024

February is expected to be a hot month for crypto assets, with many cryptocurrencies releasing assets totaling more than $800 million. According to TokenUnlocks statistics, 26 crypto projects plan to unlock tokens in February, possibly flooding the crypto market with about $1 billion in crypto assets.

Many popular projects, including Aptos (APT), The Sandbox (SAND), and Avalanche (AVAX), have unlocking events planned for February 2024.

Aptos (APT) will unlock 7.34% of its entire supply on February 11, totaling 24.84 million APT tokens worth $228.55 million. In the similar spirit, metaverse platform The Sandbox unlocked $205.59 million SAND tokens on February 14, accounting for 9.19% of its circulating supply. At the time of writing, these tokens were worth $90.46 million.

On February 29, Ethereum L2 blockchain Optimism will unlock 24.16 million OP tokens valued $71.51 million. This accounts for 2.52% of its entire supply.

The Immutable (IMX) layer two scaling solution is one of the most popular Ethereum layers. The network has more than $36 million in TVL, which has climbed by around 28.8 percent in the last week. The platform’s current trading price is roughly $2.77, reflecting a tremendous rise in demand.

However, starting February 23rd, the network is set to disburse $2.5 million in IMX tokens over a 28-day period. This will create continuous selling pressure on the platform, potentially leading to a negative trend.

(IMX) project, a rapidly expanding layer two scaling solution on the Ethereum network, is set to distribute 1.22 million IMX worth about $2.37 million per day for 28 days starting February 23.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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