Avalanche (AVAX) Surges 72% Despite Token Unlocks: What’s Behind the Bullish Momentum?

• AVAX, the ninth-largest crypto, defies token unlocks, surging 72% in December despite releasing 3 million tokens worth $115 million.

• Open Interest in AVAX futures hits an all-time high at $370 million, signaling growing market confidence.

Avalanche (AVAX), a prominent cryptocurrency, has seen approximately 3 million of its tokens unlocked and pushed into circulation in December. With a prevailing market price of $38.52 per token, this injection represents a value of around $115 million.

Most of these tokens were distributed as part of staking rewards, adding inflationary pressure to the market. Experts and traders have been closely monitoring this development, curious about its potential impact on AVAX’s price performance.

AVAX has exhibited no apparent downward pressure on its price despite the significant influx of tokens. It has defied the odds by trading at 7% higher than its value at the same time the previous day. This unexpected resilience can be attributed to the relatively small proportion of tokens released, accounting for just 0.82% of AVAX’s total circulating supply.

Even the previous token unlock event in November, involving 9.54 million tokens, failed to pull AVAX down.

Future Outlook and Market Performance

The crypto community’s attention now turns to the future, as the next major token unlock event is scheduled for February 22, 2024, releasing another 9.54 million tokens. Observers are keen to see whether AVAX will continue to demonstrate its resilience or if it will experience a dip in price.

This uncertainty comes at a time when AVAX has been a standout performer, yielding impressive returns of nearly 72% in December alone. Remarkably, AVAX has maintained this performance despite a broader market correction.

Crypto experts analyzing AVAX’s price fluctuations anticipate an average rate of $39.73 by December 2023. The projected minimum and maximum prices are $35.80 and $43.66, respectively. These forecasts highlight the ongoing interest and optimism surrounding AVAX in the crypto market.

AVAX Market

AVAX’s impressive price performance in December has also translated into strength in the derivatives market. Open Interest (OI) in AVAX futures has surged to an all-time high (ATH) of $370 million over the past week, based on data from Coinglass. The rising price has increased bullish bets for the asset, with more traders holding long positions than those expecting price declines.

As AVAX approaches the crucial resistance level of $41, speculation in the cryptocurrency community is rife.

Interestingly, a significant portion of AVAX’s open interest, amounting to 73%, emanates from just two exchanges – Binance and ByBit. Binance leads the way with 44% of the total open interest, equivalent to $184 million, while ByBit contributes 28.8% with $119.67 million. Other exchanges like BingX, OKX, and Bitget have notable open interest figures.

While AVAX’s open interest has reached an all-time high, it’s worth noting that the cryptocurrency still has a long way to go to reach its previous peak price of $146. However, historical data suggests a positive correlation between open interest growth and price appreciation, fueling optimism among AVAX investors.