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Avalanche See High On-chain Transfers Due to Tokens Unlocking — Reversal On The Horizon?

Last Updated November 24, 2023 3:07 PM
Nikola Lazic
Last Updated November 24, 2023 3:07 PM

Key Takeaways

  • There has been an urge in on-chain activity before the AVAX token unlock.
  • AVAX price has gained amidst the upcoming token release.
  • What is the potential market impact of the new AVAX supply?

Avalanche’s AVAX token is at the forefront of a significant on-chain activity surge. This increase is most notable in the lead-up to a major token unlock event. An extraordinary 3156.83% spike in transactions ranging from $0.00 to $1.00 and a 233.33% rise in the $1 million to $10 million transaction bracket was seen. 

This bustling on-chain activity coincides with a 110% increase in AVAX’s price over the past month, with the token currently trading at around $21. However, the landscape is bracing for a new dynamic with the upcoming token unlock, which will release approximately $213.35 million worth of AVAX tokens, constituting 2.68% of the circulating supply. 

With the price of AVAX previously increasing parabolically, will this new supply cause a trend reversal? 

AVAX Token Unlock

Avalanche, a prominent layer-1 blockchain, is preparing for a significant event in its ecosystem. Today, November 24th, there will be a token unlock, releasing 9.54 million AVAX tokens, which currently represent about 2.68% of the circulating supply and are valued at approximately $213.35 million. 

AVAX
AVAX token release schedule

 

This release is a part of the blockchain’s scheduled events and is expected to have a notable impact on the market dynamics for AVAX.

The tokens are set to be distributed among strategic partners, founders, team members, and the community through airdrops. Notably, the team allocation is the largest, with 4.5 million AVAX tokens valued at around $100.62 million, highlighting the significance of this unlock in Avalanche’s ongoing development and growth.

High Transfer Activity 

According to data from IntoTheBlock, there is a remarkable trend in transaction sizes on the Avalanche network.

The smallest cohort, ranging from $0.00 to $1.00, experienced a massive surge of 3156.83%. Following this, transactions between $1 million and $10 million increased significantly by 233.33%. Similarly, transaction sizes in the $1k to $10k and $100k to $1 million brackets increased by 110%, while transactions between $10 and $100 rose by 81.51%.

IntoTheBlock data
High spike in token transfers

Contrastingly, the transaction size category of $1.00 to $10.00 was the only group to witness a decline, dropping by 48.21% over the past month. Overall transaction volume on the network has also reached a new high, with over 21 million AVAX transacted this week, a level unseen since May 2022. In dollar terms, this surge in transaction volume equates to an impressive $460.33 million.

AVAX Price Analysis 

The price of the AVAX token was in an uptrend from October 19, when it revisited its prior low of $8.60 made on September 24. 

Downtrend started
The first bearish structure seen

As it established support, an upturn was made with strong bullish momentum and led the price above its previous macro high of around $21, reaching almost $25 on November 16. It entered the resistance zone above and formed a double top the next day, with the price immediately decreasing to $20.  

After a minor recovery to $23, it declined to $19 again, making a lower low. It has been on the rise since then, but this could have marked the start of a more significant downtrend. Zooming onto the 4-hour chart, we can see that the price is likely headed for its first major correction. 

ABC correction
Correction expected to $15

After making it to the horizontal resistance zone on a higher high with a five-wave pattern, it will now make a three-wave correction to the downside. At its typical point of 0.618 Fibonacci level, the price target amounts to around $15, which correlates with the horizontal support. 

If AVAX starts its bull cycle, this would be its first bull market correction that will establish the first higher low needed for a sustainable multi-year uptrend. 

Disclaimer

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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