By
Steve Muchoki
May 10th, 2024
The forthcoming release of 9.54 million AVAX tokens, representing 2.6% of Avalanche’s entire token supply, is as per the predetermined schedule for the gradual distribution of the altcoin from its inception.
While the broader cryptocurrency market registered strong gains last week, Avalanche (AVAX) price has been underperforming with 6.3% on the weekly chart. In the last 24 hours, the AVAX price has tanked by 4.79% and currently trading at $37.70, as the altcoin reverses its trajectory from the resistance of $41.
The Avalanche Token Unlock
The Avalanche blockchain network is gearing up for a significant event that could cause ripples across the cryptocurrency landscape. On February 22nd, a substantial amount of new Avalanche coins, valued at approximately $367 million, will become available for trading.
This release of 9.54 million AVAX tokens, constituting 2.6% of Avalanche’s total token supply, follows the network’s planned schedule to gradually distribute all its cryptocurrency since its inception. However, given the considerable dollar value of this release, investors and experts are closely monitoring how it might influence the price of AVAX and broader market dynamics.
Regarding the distribution of these unlocked tokens, the key stakeholders of the Avalanche ecosystem will receive a majority of these tokens. The core Avalanche team will receive the largest share, totaling 4.5 million AVAX valued at $177 million. Strategic partners will follow with 2.25 million AVAX, approximately $89 million in value, and the Avalanche Foundation with 1.67 million AVAX, valued at $66 million. Additionally, $44 million worth of tokens will be distributed to the broader Avalanche community.
The past AVAX token releases had a mixed impact on the cryptocurrency price. While November 2023, with an unlock of approximately $198 million, saw AVAX surge by over 127% amid positive market sentiment, earlier releases in 2023 appeared to coincide with brief price drops of 6-12% as new supply entered the markets.
How Will AVAX Price React This Time
It’s difficult to predict accurately how the Avalanche (AVAX) price will react during the upcoming token unlock this Thursday. Basically, a lot depends on the developments in the broader crypto market. After a strong rally last week, the altcoin market is seeing some pullback amid some profit bookings. Thus, if the market mood remains bearish going into Thursday, it could further exacerbate the selling pressure on Avalanche.
The impact of this AVAX release hinges on Avalanche’s capacity to expand its user base, entice developers to create on its platform, and foster real-world adoption. Although the AVAX transaction volumes surged during the late 2023 rally, they have now stabilized to more sustainable levels.
Should Avalanche persist in executing its technology roadmap and fulfilling its vision, the upcoming unlock might merely trigger short-term volatility. However, if adoption slows down, the substantial influx of new AVAX supply could exacerbate selling pressure.