The price of the AVAX token – the native cryptocurrency of blockchain smart-contracts platform Avalanche – has continued to tick up in early November to hit an all time high - mainly, it would appear, on the back of the latest cryptocurrency market rally. This new high of $96.91 on 8 November comes after the price had retreated from an earlier high in September when the Avalanche Foundation secured $230m in funding.
At its peak the AVAX/USD price had risen by more than 2,800% since the start of the year, although it has fallen back now (10 November) to $89.78.
Avalanche has revealed that the bulk of the funding money will go into its recently announced (1 November) $200m Blizzard project which it says "is dedicated to accelerating development, growth, and innovation across the ecosystem of builders and users of the Avalanche public blockchain and beyond." The statement adds that the funding will look at four main areas: "DeFi, enterprise applications, NFTs and culture applications, and will also look for opportunities to support other emerging use cases such as security token issuances, liquidity providers and self-sovereign identity."
What is the Avalanche ecosystem and what has propelled its coin to become 13th largest cryptocurrency by market capitalisation in a short space of time?
In this article, we look at the recent AVAX news developments and the latest long-term price forecasts.
Avalanche targets high-speed dApps, NFTs
Launched in September 2020 by the Avalanche Foundation, the Avalanche blockchain is a decentralised proof-of-stake (PoS) platform designed to run using smart contracts at the scale of global finance, with near-instant transaction completion. Ethereum developers can quickly build decentralised finance (DeFi) apps on Avalanche.
Avalanche features three built-in blockchains, which are each validated and secured by its Primary Network.
The P Chain manages validators and custom networks, according to the Avalanche website. Validators on the blockchain stake AVAX to secure the network. The X Chain is the blockchain developers use to create and exchange assets. Transfers that require high and instant settlement throughout are best suited to the P Chain.
The C Chain is the default blockchain for smart contracts. It enables developers to create Ethereum-compatible decentralised applications (dApps) with lower fees and faster transactions.
Avalanche claims to be the fastest blockchain platform for smart contracts, processing more than 4,500 transactions per second (TPS), compared with around 1,500 TPS on the Polkadot blockchain, 14 on Ethereum and seven on Bitcoin. Transactions are finalised in less than two seconds, compared with 60 seconds on Polkadot, six minutes on Ethereum and 60 minutes on Bitcoin.
Developers can deploy customised private and public blockchains that fit their needs for their applications. They can build their own virtual machines and control how the blockchain operates.
Avalanche can also scale to millions of validators who stake their AVAX tokens to process transactions with computer-processing units rather than more costly graphics-processing units or application-specific integrated circuits.
AVAX price spikes on funding round
The AVAX price jumped by more than 17% on 16 September to a fresh high of $67.86, after the Avalanche Foundation announced that it raised $230m in a financing round led by Polychain and Three Arrows Capital, and joined by R/Crypto Fund, Dragonfly, CMS Holdings, Collab+Currency, Lvna Capital and a group of smaller investors. The foundation said:
There are more than 270 projects building on the Avalanche crypto platform, including DeFi projects like Tether (USDT), SushiSwap (SUSHI), Chainlink (LINK) and The Graph (GRT). There are more than 1,000 validator nodes staking AVAX tokens.
On 17 September, dynamic market-maker (DMM) Kyber Network, the first DMM protocol to launch on Avalanche, joined Avalanche Rush.
Avalanche Rush offers incentives in the form of mining grants and airdrops of up to $180m in AVAX tokens for developers to deploy DApps on Avalanche to accelerate the launch of easy-to-use, fast and cost-effective DeFi applications.
Kyber and Avalanche will distribute $3m of AVAX and $2m of KNC – the Kyber crypto coin – as liquidity-mining incentives across seven liquidity pools over a period of two months in two phases, with the date to be announced soon.
On 21 September, Avalanche added Yield Yak, a native dApp on its platform, to its Avalanche Rush programme. It allocated $100,000 to support developers in advancing YY Swap, Yield Yak’s open-source decentralised exchange aggregator, which aims to find the best trade options for DeFi users. The foundation said:
And on 30 September, decentralised trading platform Trader Joe joined Avalanche Rush, with the Avalanche Foundation contributing $10m in AVAX tokens and Trader Joe allocating a further $10m in JOE tokens to incentive programs.
On 1 November it announced its $200m Blizzard project to help grow the ecosystem and will look to fund four key areas: "DeFi, enterprise applications, NFTs and culture applications." Other areas under consideration are "opportunities to support other emerging use cases such as security token issuances, liquidity providers and self-sovereign identity."
Director of the Avalanche Foundation, Emin Gün Sirer, said “Blizzard will play a key role in further accelerating this growth, and solidifying Avalanche’s position as the premiere home for projects and people pioneering the next era in our space.”
AVAX was listed on the Coinbase exchange on 29 September, increasing access to the coin for cryptocurrency traders and investors.
The AVAX token price continued to climb from $67.86 when the funding was announced on 16 September to a new all-time high of $79.52 on 23 September.
The AVAX price then turned lower, dropping to $51.23 on 12 October, but has since moved up as the cryptocurrency markets have rallied, reaching an intraday trading high of $64.31 on 21 October. At the time of writing on 10 November, the coin traded at $89.79.
Where do forecasters expect the price to move after the recent gains? Is it time to consider buying AVAX or selling it short?
AVAX price prediction: Will the price return to its all-time high?
Short-term AVAX technical analysis from CoinCodex on 10 November showed sentiment was bullish, with the token trading around $89. There were 21 indicators giving bullish signals and four were bearish, yet only the Hull Moving Average was giving a sell signal. However, CoinCodex predicted that the price could drop to $92.17 by 17 November.
As of the time of writing, the Avalanche price prediction from algorithm-based forecasting site Wallet Investor projects that on average, AVAX could trade down at the $92.377 at the start of December, before rebounding to $96.345 by the end of the month. Wallet Investor estimates that the average price could then climb to $138.059 by the end of 2022, and almost double to reach $261.417 by the end of 2025.
The AVAX coin price prediction from the Economy Forecast Agency’s algorithm projects opines that the price could jump in December to end 2021 at $136.9, then rise to $245.2 by the end of 2022 and reach $327.4 by November 2025.
Based on historical data, the AVAX forecast from DigitalCoin projects that the price could average $158.41 in 2022 and rise to an average of $273.36 in 2025. The site predicts that the price could dip from $298.05 in 2026 to $270.52 in 2027 but rebound to an average of $409.66 in 2028 with a possible peak price of $443.94 during that period.
PricePrediction is more bullish for the long term, projecting that the price will average $420.6 in 2025, up from $92.56 in 2021 and $130.62 in 2022. It says the price could soar to $2,749.96 by 2030.
It is important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict the price of a coin in a few hours, and even harder to give long-term estimates. As such, analysts and online forecasting sites do get their predictions wrong.
We recommend that you always do your own research and consider the latest market trends, news, expert opinion, and technical and fundamental analysis before making any investment decisions. And never invest more than you can afford to lose.
Cryptocurrencies are highly volatile, making them riskier than other potential investments. Whether the Avalanche cryptocurrency is a suitable investment for your portfolio depends on your personal circumstances and risk tolerance. You should do your own research and evaluate the level of risk you are prepared to accept before you invest your money.
Cryptocurrency forecasting sites predict that the AVAX price will rise over the coming years, despite short-term volatility. However, it’s crucial to remember that they can and do get their predictions wrong. Cryptocurrency markets remain as volatile as ever, and the coin’s price could crash just as quickly as it increases.
The future of the AVAX token will depend, among other factors, on the development of the Avalanche ecosystem as well as continued interest from investors in the broader cryptocurrency markets.