AVAX Price Volatility Looms as $240M Token Unlock Approaches

Highlights

AVAX price could fall 22% if the token unlocks trigger a sell-off.
Team and VC investors will receive a total of 7.75 million tokens ($155M)
AVAX price could fall 22% if the token unlocks trigger a sell-off.

AVAX price consolidates in a dangerous zone, just seven days from its final network token unlock. The Avalanche team will release a total of $240 million worth of tokens to the open market, with the majority going to the team and strategic investors, key among them Three Arrows Capital. The event, which will take place on August 20, is anticipated to create price volatility, but AVAX bulls think the asset will hold on just fine.

$143M in Jeopardy if Avalanche Drops

The upcoming token unlock will release 9.54 million AVAX tokens into the market and distribute them among strategic investors, the Avalanche team, the Avalanche Foundation, and community airdrops.

Historically, token unlocks are considered bearish events because they dilute the circulating supply. According to data from IntoTheBlock, 74.39% of AVAX holders are already at a loss, with only 11.78% in profit and 13.83% at break-even. If the price drops below $15, more than $143 million worth of AVAX, including those at break-even, could become unprofitable.

Interestingly, whale activity around AVAX has surged to a weekly high, with large transactions totaling $131.91 million. However, whale concentration in AVAX dropped from 30.37% on August 11 to 29.83% on August 12, indicating that the previous whale activity involved significant selling by large investors.

Despite this, the inflow from large holders increased by 75.5% over the last week, compared to an outflow of 30.65%. This net positive inflow suggests that smart money is betting on a rise in AVAX’s price after the token unlock.

Will AVAX Price Support Whales’ Bet?

Delving into the technical analysis, Avalanche price is trending downward. The price is currently below both the 50-day EMA (green line at $25.86) and the 200-day EMA (black line at $31.06), reinforcing the bearish trend. AVAX may encounter resistance at $25.86 and $31.06. Pivot points indicate additional resistance levels, particularly R1 at $31.87 and R2 at $38.03.

On the flip side, AVAX price is testing the support level around $20.67. Should it break below this, the next significant support levels are $15.63 and $9.47.

The price is nearing the apex of a falling wedge, a bullish reversal pattern if confirmed by an upward breakout, though confirmation has yet to occur. The Relative Strength Index (RSI) stands at 38.89, suggesting the asset is in oversold territory but not deeply so, hinting at a potential reversal if buying pressure increases. Meanwhile, the Chaikin Money Flow (CMF) is negative at -0.13, indicating that selling pressure still dominates, consistent with the ongoing downtrend.

AVAX price prediction shows that if the price breaks above the falling wedge and the 200-day EMA, it could indicate a significant trend reversal and invalidate the current bearish thesis. If the bullish momentum continues, the price could reach a short-term target of around $43.07 (R3 pivot) and a long-term target of approximately $60.14.

Frequently Asked Questions (FAQs)

1. What is the upcoming AVAX token unlock event?

The upcoming token unlock event for AVAX will release 9.54 million tokens into the market, which is valued at approximately $240 million.

2. Why is the token unlock event significant?

Token unlocks can have a significant impact on a cryptocurrency’s price because they increase the circulating supply. Historically, such events are considered bearish as they can dilute the value of the existing tokens, potentially leading to price drops.

3. What are the potential price targets for AVAX if a bullish trend emerges?

If AVAX breaks above the falling wedge pattern and surpasses the 200-day EMA, it could signal a significant trend reversal. Short-term bullish targets could be around $43.07 (R3 pivot), with a long-term target of approximately $60.14.

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Evans Karanja

Evans Karanja is a crypto analyst and journalist with a deep focus on blockchain technology, cryptocurrency, and the video gaming industry. His extensive experience includes collaborating with various startups to deliver insightful and high-quality analyses that resonate with their target audiences. As an avid crypto trader and investor, Evans is passionate about the transformative potential of blockchain across diverse sectors. Outside of his professional pursuits, he enjoys playing video games and exploring scenic waterfalls.

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