A substantial amount of AVAX, the native token of the Avalanche network, is set to be unlocked in the coming month. According to K33 Research, formerly known as Arcane Research, this unlocking event would very likely cause a negative impact on the value of the cryptocurrency.
In reaction to this “discovery,” K33 Research has removed Avalanche (AVAX) from its list of most promising crypto assets in its “May Selection Assessment”.
9.5 Million AVAX Tokens To Be Unlocked In One Month
According to data from Token Unlocks, 9,541,800 AVAX tokens – worth over $168 million at current valuation – are set to be unlocked in less than a month from now. The unlocking event, scheduled for May 28, will release nearly 3% of the 327 million AVAX tokens currently in circulation.
The unlocking of these tokens is expected to negatively affect the price of AVAX, as per a report from K33 Research. In this same report, the research company disclosed its decision to “throw out” AVAX from its K33-Vinter index, which is an equal-weighted mix of the most promising tokens amongst the top 30 crypto assets.
Source: K33 Research
According to K33’s Vice President, the decision to kick Avalanche’s native token off this index was based on the reassessment of the token’s expected inflationary pressure and ownership concentration. He stated that AVAX received a lower Inflation and Ownership Concentration score; hence its exclusion from the Vinter Quality Index.
Data from Token Unlocks reveals that more than half of the cryptocurrency’s supply is still locked. However, these locked tokens will be gradually released over the next seven years, with the last unlock projected for October 20, 2030.
Avalanche Price Steady Despite Surge In Network Revenue And Activity
The activity on the Avalanche Network has experienced a surge in recent weeks. According to data from Token Terminal, the daily activity on the blockchain improved by a massive 91.5% in the last month. Moreover, there was a staggering 386% rise in the platform’s revenue within this timeframe.
However, it can be said that this hike in network activity and revenue hasn’t particularly influenced AVAX’s market performance in the past month. In the last 30 days, AVAX has experienced a measly 1.7% price increase, per CoinGecko data.
AVAX trading at $17.57 | Source: AVAXUSD chart from TradingView
One of the reasons for this disappointing market run could be Avalanche’s impending token unlock. A tweet from K33 Research reads that the amount of AVAX in free-floating circulation will increase quickly due to the unlocking of tokens to early investors, contributors, and team members.
Furthermore, the consistent and significant unlocking of AVAX tokens over the next few years is expected to increase the cryptocurrency’s selling pressure – in comparison to other coins. This is due to the fact that most investors would like to cash in on their assets by selling a portion of their unlocks.
Featured image from Avalanche, chart from TradingView
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