The native token of the Avalanche network, AVAX, has experienced a significant 18% drop over the past week, a bearish move that recent institutional interest has failed to curb. This correction is primarily attributed to a combination of scheduled token unlocks and general market weakness, according to analysis shared by expert Jina. The situation is creating uncertainty among investors, traders, and treasuries operating with the asset.
The main factor behind this selling pressure is the increase in circulating supply. Token unlocks are scheduled events where a number of previously locked assets are released into the market. Consequently, if recipients decide to sell, this can push the price downwards considerably. Jina notes that this dynamic, coupled with a phase of profit-taking by investors, explains the negative performance of the price of Avalanche over the last seven days, directly affecting those who are staking or managing funds with AVAX.
Technical Analysis and Conflicting Projections
Amid this volatility, technical analysts are closely watching a crucial support level. The 50% Fibonacci retracement, located at $20.40, has become the main operational reference. This threshold captures the market’s attention, as a break below it could accelerate declines, while a bounce from this point could signal a potential trend reversal. The price action in this zone will be decisive in defining the short-term direction for Avalanche.
Despite the bearish pressure, the underlying technology of Avalanche features characteristics designed to create long-term scarcity. Its economic model combines a maximum supply capped at 720 million tokens with a fee-burning mechanism, where a portion of transaction fees is permanently removed from circulation. Although this design can mitigate some of the selling pressure, it has not been enough to counteract the immediate impact of recent unlocks.
The implications of this scenario extend to the overall perception of the asset, which is evident in the remarkable dispersion of price forecasts. While platforms like Changelly project an optimistic target of $253.31 for 2025, others like CoinCodex offer a more conservative view, placing it between $28.21 and $33.67 for the same year. This disparity reflects volatility and a lack of consensus on the project’s future trajectory, creating a complex environment for investors.
The Avalanche network’s ability to absorb the new supply will largely depend on its growth in adoption and demand, measured through active users and decentralized applications. The upcoming unlocks, scheduled for August and November 2025, will be a key test for the market. The price reaction around the $20.40 support level and during these critical dates will set the practical tone for assessing risk and strategic positioning in one of the most dynamic assets in the ecosystem.
