Avalanche Rumbles above as Token Unlock Winds ahead

The 12th most valuable cryptocurrency in the world, Avalanche (AVAX 6.59%)is a top digital asset that many investors are watching closely. Layer-1 blockchain powers much of the decentralized finance (DeFi) world, with its own unique smart contract-based DeFi ecosystem that continues to see strong growth, gaining market share over other leading networks in this space.

Avalanche’s technological advances have enabled this network to process up to 6,500 transactions per second, while maintaining some of the best security and scalability features in the digital asset space. That in itself is enticing to investors, many of whom are clearly in buying mode today. Avalanche’s native AVAX token is up 7.8% in the last 24 hours as of 2:30 PM ET.

Today’s move brings Avalanche’s weekly return to the green, with significant selling pressure for the token seen in yesterday’s session. This selling pressure appears to have been the result of a major token unlock, where 9.54 million AVAX tokens were released to the market on August 19th.

Headwind now in the rearview mirror

As with stock market issuances, the addition of new tokens for a particular crypto project tends to lead to exaggerated volatility in the short term. Investors simply do not know if the issued tokens will be immediately sold on the open market. Bracing for the impact, many tend to sell ahead of the issue, choosing instead to wait until the dust settles to re-enter.

In the case of Avalanche, where 9.54 million tokens have been unlocked in the market (resulting in a circular supply of approximately 395.4 million tokens), the final global inflation rate from this unlock is approximately 2.4%. And the fact that the Avalanche bounced back the way it did today (especially on a day when the overall market is relatively flat) is encouraging.

It appears that many feel free to retake positions they may have taken off following this announcement, which ultimately led to a whimper in terms of general selling pressure.

Avalanche is a purchase?

One of the key announcements from Team Avalanche regarding this token unlock is that: “After this event, no additional tokens will be allocated to the team and strategic partners. Any remaining emissions will go to the Avalanche Foundation, supporting the initiatives. focused on growth and development.” This is good for investors who may be concerned about dilution, as future token sales are less likely to be sold on the open market.

Many in the market seem to have assumed that insiders who were awarded these tokens long ago would likely fold almost immediately, and while some certainly did, the relative lack of selling in the market may indicate the fact that insiders intend to hold for the long term. If that’s the case, this could be a very bullish sign for this crypto project considering how far it has fallen in the crypto market cap rankings since its peak.

Personally, I think Avalanche is among the most interesting projects out there, and it’s one I’ll be paying more attention to in the coming days after this recent move.