Cryptocurrency enthusiasts are eagerly anticipating a significant token unlock event on the Avalanche (AVAX) network set for August 20. This event will introduce $240 million worth of new AVAX tokens into the market. Investors and analysts are keenly observing potential impacts on AVAX’s price.
22% Drop Risk for AVAX?
The Avalanche team and strategic investors will together hold 7.75 million AVAX tokens. Upon release, these tokens might trigger a wave of sales, potentially causing a 22% drop in AVAX’s price. Typically, such token unlock events increase the circulating supply, which often negatively impacts the token’s value.
According to IntoTheBlock data, 74.39% of AVAX holders are currently at a loss, with only 11.78% in profit and 13.83% breaking even. If the price dips below $15, approximately $143 million worth of AVAX tokens could transition into the loss zone.
Whale Activity’s Price Impact
Despite the impending unlock, whale activity around AVAX has been notable. Large transactions amounted to $131.91 million, but whale accumulation dropped from 30.37% to 29.83%, indicating significant sales by large investors. In the past week, large investor purchases increased by 75.5%, while exits stayed at 30.65%, suggesting that smart money is betting on a post-unlock price increase.
From a technical analysis perspective, AVAX is in a downtrend, trading below its 50-day and 200-day exponential moving averages (EMAs) of $25.86 and $31.06, respectively. Resistance levels at $25.86 and $31.06 reinforce the bearish trend. Currently, AVAX is testing the support level at $20.67. Should it fall below this, further support levels are at $15.63 and $9.47. The price is nearing the apex of a falling wedge formation, and an upward breakout could indicate a bullish reversal, though this has yet to be confirmed.
Key Insights for Investors
– The token unlock could lead to increased selling pressure and a potential 22% price drop.
– 74.39% of current AVAX holders are at a loss, highlighting a critical price threshold at $15.
– Whales’ recent activities suggest a complex market sentiment, with both significant sales and increased purchases.
– Technical indicators point to a bearish trend but watch for a potential bullish reversal if key resistance levels are breached.
In conclusion, the AVAX token unlock event presents both risks and opportunities for investors. Market participants should closely monitor whale activity, technical indicators, and support levels to navigate the potential price fluctuations effectively.