Coin Spotlight
26 Nov 2021

Avalanche (AVAX) on Spotlight

Deepan Datta

Avalanche is one of those crypto projects, which we cannot overlook. Its native token AVAX has grown over 40 times, from near $3 (₹222) to over $120 (₹9,222) in the last 12 months. And, the all-time high level is $146.22 (₹12,093), which was made on 21st Nov 2021. 

Astonishing, right? And, as you read this, we have already sensed your interest to know more about this coin. So, stick till the end. 

Key Token Metrics

  • Coin rank: 11th
  • Coin market cap (as of 25th Nov 2021): $29.29 billion 
  • Coin market dominance: 1.06%
  • Coin economics: Deflationary
  • Max coin supply: 720 million
  • Circulating supply: 223.8 million (31% of max supply)
  • Consensus mechanism: Proof-of-stake (PoS)

Technical Analysis: AVAX Price Prediction

Avalanche

source: tradingview.com

AVAX has been on a dream run and is witnessing strong buying at all the psychologically important levels. At the moment, AVAX looks to be in a consolidation phase and looking for some steady support below. 

On the Fibonacci Retracement indicator, the $114 (₹8,500) level is coming as one of the vital support areas, followed by the $94 (₹7,050) level, which coincides with the 50 Day EMA line. We can see that the 50 Day EMA is acting as a strong support line, and in the past, AVAX has successfully bounced back multiple times from there. 

What should investors do? Currently, the crypto market sentiment is quite dull and may also affect AVAX prices in the short term. If it breaks below the key support area of $114 (₹8,500), it could test the 50 Day EMA for support. This could be an excellent buying opportunity. 

Conversely, investors should wait for AVAX to clear above the all-time high level to start adding new positions. 

EMA: Exponential Moving Average

A Brief Overview of Avalanche Blockchain

Avalanche is a blockchain-based smart contract platform, similar to Ethereum blockchain, but is highly scalable, flexible, and cost-efficient. 

Launched in September 2020, Avalanche has become one of the most formidable blockchain projects in the crypto world in just over a year. As of 25th Nov 2021, the total value locked on the Avalanche platform has exceeded $13 billion, only behind the top three platforms, Ethereum, Binance, and Solana.

How is Avalanche Different from Ethereum Blockchain?

Avalanche is a proof-of-stake blockchain platform that uses three blockchains instead of one, and each blockchain has a distinct role. 

For instance, the X-Chain or Exchange Chain is responsible for creating and transacting digital smart assets. All the AVAX tokens and tokens built on the Avalanche blockchain exist on X-Chain. And, all the transactions that are executed on X-Chain generate fees in AVAX. 

The second chain is C-Chain or Contract Chain that runs smart contracts and is Ethereum Virtual Machine (EVM) compatible. It means the DApps, which are hosted on the Ethereum blockchain, can also be deployed on the Avalanche blockchain. This gives developers the benefit of accessing features of both platforms.

And, the third chain is called P-Chain or Platform Chain that allows creating L1 and L2 blockchains, and in Avalanche’s terms, they are called subnets. The subnets are responsible for the network’s security, scalability, speed, and interoperability. 

P-Chains play a critical role in scaling the Avalanche’s network and can process roughly over 4,500 transactions per second (TPS). At present, Ethereum has a 14 TPS limit. 

Another feature of Avalanche’s blockchain is that it has the fastest finality time across all blockchain/crypto projects. Finality time is the time taken to process and add transactions to the blockchain to become irreversible. Avalanche has a finality time of sub-one second, whereas, Ethereum takes just over a minute and Bitcoin’s average time to finality is 60 minutes.

AVAX Coin Economics

AVAX is a deflationary cryptocurrency, and its adoption can fuel its price growth in the long term. Confused how? Let’s understand. 

The supply of AVAX tokens is hard-capped at 720 million coins. And the current circulation in the market is just over 223 million coins. 

Here is the exciting part. The transaction fees collected in AVAX are burned permanently, resulting in the reduced circulation of AVAX and making it a deflationary cryptocurrency, similar to Bitcoin. To date, 436,685 AVAX tokens have been burned permanently.

And with over 60% of the AVAX supply staked to secure the network, the increased adoption and burning of tokens will result in scarcity. This will make AVAX prices skyrocket in the future.

Avalanche Backers

The team behind the success of Avalanche belongs to some of the finest organisations in the world, including Google, Microsoft, NASA, Morgan Stanley, Credit Suisse, Accenture, etc. And the founder of Ava Labs is Emin Gun Sirer, a computer scientist and associate professor of computer science at Cornell University. 

Recently, Ava Labs has completed a private sale of AVAX tokens worth $230 million. The fundraising round witnessed participation from leading crypto funds, including Polychain Capital Three Arrows Capital, Dragonfly, CMS Holdings, etc. 

Industry Partnerships

Deloitte has formed a strategic alliance with Ava Labs to use its blockchain technology to enable a new disaster recovery platform to help state and federal governments in the US. 

Nitro Network, formerly known as Nucleus Vision, has partnered with Ava Labs to build a Helium like private communication network on Avalanche.

In a short period, Avalanche has proved its capability and taken heads up with the leading smart contract platforms on adoption and improving scalability. 

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

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Deepan Datta

Content Writer

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