On Thursday, November 16, AVAX – the native cryptocurrency of Layer-1 blockchain Avalanche – retested the $25 mark for the first time in four months. Crypto analysts say the token’s rapid rise could have been the result of a resurgence of the GameFi sector within the Avalanche ecosystem.
Investor interest in Avalanche increased significantly over the past week, leading to AVAX racing towards $24. Prominent crypto analyst Hitesh Malviya identified the catalyst behind the price breakout that has seen AVAX making 150% gains in 30 days to be Avalanche’s new GameFi subnets.
AVAX SURGED BY 150% IN 30 DAYS DUE TO RISING DEMAND FOR AVALANCHE-BASED GAMES
In an elaborate analysis made on X, Hitesh explained that 116 new validators have been added to the blockchain in the past week. Avalanche requires each participant to stake a minimum of 2000 AVAX to become a validator. This could mean that a minimum demand of around 232,000 AVAX worth $5.1 million would have been generated through validators alone.
Meanwhile, Avalanche GameFi subnets like DFX and DEXALOT were already processing more transactions than the Avalanche C Chain. With new gaming subnets such as Shrapnel and Loco Legends set to go live soon, the transaction figures are only going upward.
As per its protocol, Avalanche burns 100% of the revenue it generates as transaction fees. Therefore, the recent spike in network transactions fueled by game subnets appears to have burned 38,056 AVAX worth $837,000 in 30 days.
AVALANCHE’S RALLY MARKED BY ON-CHAIN ACTIVITY RATHER THAN HYPE
Typically, increased token burn in the middle of a rally indicates that the upward price movement is being driven by organic transactional activity on the blockchain. To put it into simpler words, the ongoing AVAX rally is backed by increased network activity, rather than just a case of speculators hyping up the token.
On-chain data tracker StakingRewards confirmed Hitesh’s claims by reporting that 220.2 million AVAX, equivalent to $4.8 billion, have been staked across various applications on the Avalanche network as of November 3. That figure reached 255.91 million AVAX on Thursday.
StakingRewards displayed a chart that read Avalanche users have deposited 36 million AVAX worth around $800 million into smart contracts on the blockchain within the last 10 days. This massive spike in staking led to the 150% price breakout for AVAX over a month.
With more gaming projects on the way, AVAX holders and node validators will be compelled to keep their tokens staked. The Global in/Out of the Money (GIOM) metric – a classification of wallet addresses based on whether they are profiting, breaking even, or losing money – for Avalanche estimates that the AVAX price rally could reach historic highs above $30.
Avalanche’s GIOM shows that bears must be able to break the token’s initial resistance at $23 to at least be confident of reclaiming the $30 valuation. There is also the risk of a price correction if the over 400,000 investors that purchased 2.5 million AVAX at an average price of $22.98 decide to exit their positions early.
WHAT ARE THE CHANCES OF AVAX HITTING $30?
On the other hand, if bulls can take control and set the sell-wall much higher, there is a likelihood that Avalanche could reclaim the $30 price point as forecast.
However, bears could negate the optimistic outlook if the price of AVAX dips below the $12 valuation. Hope lies with the 771,000 holders who purchased AVAX at the minimum price of $14.96. If those investors manage to hold on to their tokens firmly, then Avalanche prices could avoid a larger downswing.
At the time of writing, Avalanche (AVAX) is trading at $21.84 – down 6% from its previous day’s price. In the last 24 hours, the blockchain had a trading volume of $1.89 billion. The price of AVAX has surged by 64.2% in the past week.