The Avalanche token (AVAX) has been defying expectations and gravity in recent weeks, recording substantial gains in price and derivatives interest even amidst scheduled token unlocks.
Keypoints
- About 3 million AVAX tokens were unlocked in December, but the price kept rising. The unlocks accounted for just 0.82% of the circulating supply.
- AVAX price has gained 72% so far in December, defying expectations that the unlocks would pressure the price down. It has been one of the top performers this month.
- Open interest in AVAX futures hit an all-time high of $370 million over the past week as momentum built. More traders are now long rather than short.
- AVAX surged 50% in a week while most cryptos declined. It’s nearing resistance around $41 and momentum and interest seem strong.
- Open interest in AVAX reached $413 million this week, a new record. Interest really took off in November and December, rising 400%.
About 3 million AVAX tokens were set to be unlocked from staking rewards and pushed into circulation during December. Conventional wisdom held that this influx would place downward pressure on the AVAX price due to increased selling and inflation. However, the opposite has happened – AVAX gained a whopping 72% in December despite the scheduled unlocks.
It seems the amount of tokens unlocked was too small relative to the total supply to negatively impact AVAX. The 3 million tokens only represented 0.82% of the circulating supply, far too little to shift market dynamics. Even a larger unlock of 9.54 million tokens on November 24 failed to derail AVAX’s ascent. The next major unlock of a similar quantity isn’t scheduled until February 2024.
Not only has AVAX price appreciated considerably in December, the crypto has also been recording tremendous growth in open interest for its futures contracts. Open interest refers to the total number of outstanding futures positions held by traders and is considered a barometer of sentiment. AVAX’s open interest swelled to an all-time high above $370 million over the past week.
The soaring open interest indicates traders expect AVAX’s strong price performance to continue. There has been a notable influx of traders taking long positions to profit from further upside rather than short positions betting on declines. Historical data shows AVAX price often trends higher alongside rising open interest.
AVAX impressively managed to brush off the market-wide crash earlier this week when most major cryptocurrencies plunged double-digits. As the broader crypto market floundered, AVAX flourished even more. Its price has vaulted 50% over the last week to trade around $39 currently.
In the process, AVAX has come close to surpassing formidable resistance around the $41 level. Its ability to break above this threshold could signal the rally has further room to run in the near future. Some analysts foresee an average AVAX price as high as $43 next December, a 15% premium from current levels.
Much like the price, open interest also continues reaching unprecedented heights. According to data from Coinglass, open interest across all exchanges rocketed to a record $413 million early this week after adding 19% in a single day. The open interest metric has tripled over the last month and quadrupled since October as traders pile into AVAX futures.
Exchange giant Binance facilitates nearly half of AVAX’s open interest at 44%. When combined with ByBit’s 29% share, these two exchanges represent almost three-quarters of total open interest. Such tremendous interest could propel AVAX towards its previous high should the momentum continue building.
AVAX has showcased impressive resilience and upside potential despite token unlocks and broader market turbulence.
Its robust rally suggests the crypto may still be in the early innings of a bull market. If the circulating supply unlocks remain insignificant and open interest continues rising, AVAX seems poised to leave $40 firmly in the rearview mirror.
The post Avalanche AVAX Price: Defies Gravity as Price and Interest Surge Despite Unlocks appeared first on Blockonomi.
December 15, 2023 at 05:17AM https://blockonomi.com/ from Blockonomi https://ift.tt/qeTK3Ah
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