AVAX gains 72% despite token unlocks — Is this why?
- About 3 million AVAX tokens were pushed into circulation in December.
- AVAX has recorded gains of 72% since the start of the month.
Token unlocks have become a source of significant interest in the crypto industry. Thanks to the fact that they add inflationary pressure and act as bearish catalysts for the asset, experts and traders actively monitor these events.
Is AVAX facing inflationary pressure?
As per AMBCrypto’s examination of Token Unlocks dashboard, about 3 million Avalanche [AVAX] tokens have been pushed into circulation in December as of this writing. At a prevailing market price of $38.52, this equated to about $115 million.
Nearly all the tokens were distributed as part of the staking rewards.
However, when AMBCrypto examined AVAX’s price behavior during the last 24 hours, it found no evidence of downward pressure.
On the contrary, the ninth-largest crypto in the market was trading at 7% higher than what it did during the same time a day before, as per CoinMarketCap.
The inconsequential impact of the token influx could be due to the relatively small amount. The released tokens accounted for just 0.82% of AVAX’s total circulating supply, too little to materially impact market dynamics.
Even the last cliff unlock of 9.54 million on 24 November failed to pull AVAX down, as seen from the graph below.
The next cliff unlock is due on the 22nd of February 2024, which would again see the unfreezing of 9.54 million tokens. It would be interesting to observe whether AVAX shows similar resilience or witnesses a dip.
For the uninitiated, cliff unlocks refer to tokens that would unlock on a predefined date and schedule.
AVAX moved ahead unharmed
AVAX has been one of the top performers in December, yielding nearly 72% returns on a month-to-date (MTD) basis. The asset sustained its momentum amidst a sharp correction in the broader market.
The newly-found vigor boosted AVAX’s prospects in the derivatives market. Open Interest (OI) in AVAX futures soared to an all-time high (ATH) of $370 million over the past week, AMBCrypto spotted using Coinglass’ data.
Moreover, bullish bets for the asset increased as the price moved north. Likewise, the number of traders holding long positions surpassed those gunning for price declines.
