Avalanche (AVAX) faces mounting pressure as the network braces for a significant token unlock scheduled for October 24. This event will release 1.67 million AVAX tokens into circulation—valued at approximately $35 million—raising concerns about further price depreciation amid an already weakening market.
Since reaching a high of $36 in late September, AVAX has experienced a sharp correction, plunging nearly 45% and recently testing the psychological support level around $20. On October 11, the price hovered at its monthly low, a level that has acted as support multiple times throughout the year, including in April and June. The technical outlook has turned increasingly bearish, with the price now trading below both the 50-day and 200-day Weighted Moving Averages. If downward momentum persists, AVAX could fall to the $17 support level, and a break below that could open the door to a decline toward $15.
Token unlocks, like the one approaching this week, tend to exert downward pressure on prices. By increasing the circulating supply, these unlocks can dilute existing token holdings and intensify selling pressure, especially if market sentiment is already bearish. To date, Avalanche has unlocked about 60% of its total token supply, and this process will continue gradually until at least 2030.
Beyond the unlock, recent on-chain metrics point to a broader slowdown in Avalanche’s ecosystem activity. According to blockchain analytics platform Nansen, network transactions fell by 18% over the past week, totaling 11.1 million. This decline in usage has directly impacted the network’s revenue from transaction fees, which plummeted 61% over the same period to just $345,000. However, when viewed on a monthly basis, fee revenue has surged by 120% to $2.14 million, indicating some volatility in short-term user activity.
One of Avalanche’s unique mechanisms is its fee-burning model. All transaction fees are permanently removed from circulation, effectively reducing the total supply over time. This deflationary component could help offset inflationary pressure from unlocks. The cumulative number of AVAX burned recently surpassed 4.87 million, a milestone that may offer long-term support to token value.
Despite the bearish sentiment, there are several bullish developments that could help balance the scales. Avalanche is gaining traction as a key player in real-world asset (RWA) tokenization. The network now hosts over $740 million in tokenized assets, making it one of the top five platforms in this space. Major financial players such as SkyBridge Capital and Grove Finance have collectively deployed more than $550 million in tokenized hedge funds and credit instruments on Avalanche, indicating strong institutional interest.
Additionally, Avalanche has made significant inroads in the stablecoin market. The circulating supply of stablecoins on the platform has reached $1.7 billion, highlighting its growing relevance in on-chain finance. A major milestone was achieved when the state of Wyoming launched FRNT—the first U.S. state-issued stablecoin—on Avalanche. This move represents a breakthrough in regulatory acceptance and could pave the way for more government-backed digital assets on the network.
From a technical standpoint, the AVAX chart suggests further downside risk. The recent breach below key moving averages increases the likelihood of a death cross—a bearish technical pattern where the short-term moving average crosses below the long-term moving average. If confirmed, this pattern typically signals prolonged bearish momentum.
However, it’s worth noting that AVAX has shown resilience at the $17 support level multiple times this year. Buyers may step in again at this zone, especially if broader crypto market sentiment improves or if Avalanche announces new partnerships or technical upgrades.
Looking ahead, investors should monitor several key factors that could influence AVAX’s price trajectory:
1. Market Reaction to the Unlock: Whether the newly unlocked tokens are immediately sold or held will determine short-term price action.
2. On-Chain Activity: A rebound in transaction volumes and fees could signal renewed user engagement and strengthen bullish sentiment.
3. Regulatory Developments: Positive news around government adoption, such as Wyoming’s FRNT stablecoin, could boost investor confidence.
4. Broader Crypto Market Trends: As a high-beta asset, AVAX often moves in correlation with larger cryptocurrencies like Bitcoin and Ethereum.
5. Developer Ecosystem Growth: Continued innovation and dApp deployment on Avalanche could provide long-term bullish momentum.
In conclusion, while Avalanche faces immediate headwinds due to the upcoming token unlock and declining transactional activity, its long-term fundamentals remain strong. Its strategic positioning in the RWA and stablecoin sectors, combined with its deflationary fee-burning model, offer potential buffers against short-term volatility. However, in the near term, traders and investors should be prepared for potential price weakness, with $17 remaining a key level to watch.