AVAX Experiences Downturn Due to Token Unlocking Event
Avalanche's native token, AVAX, sees a price drop as a significant token unlocking event increases its supply.
February 20, 2024
AVAX Struggles Amidst Token Unlocks
The Avalanche network's native token, AVAX, experiences a downturn as it faces a substantial $365 million token release, boosting the supply by about 2.6%. This week, while the cryptocurrency market mostly saw gains, AVAX's value fell by over 3%, underperforming compared to its peers.
Market Impact
The CoinDesk20 Index, representing major cryptocurrencies, showed a 6% increase, contrasting with AVAX's slump. Trading at $38, AVAX remains 23% below its December peak following the unlock of 9.5 million tokens designated for team members, strategic partners, and ecosystem development.
Unlocking Pressure
Historically, such token unlocks, which introduce previously unavailable tokens into circulation, have preceded price drops. These events often increase supply significantly, potentially leading to a dip in price as market demand may not absorb the extra availability. AVAX has seen 58% of its tokens unlocked to date, reflecting this trend.
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