The cryptocurrency market made a strong comeback starting in August from the May lows after China's crackdown. Recently, the crypto market came under pressure due to the potential China Evergrande default. Even amid increased volatility, some crypto tokens are doing well. Avalanche has gained 58 percent in the past month and almost 2,000 percent YTD.
Avalanche was launched in 2020 by Ava Labs, a small team of computer engineers led by Cornell researcher Emin Gun. It's a smart contract platform that's rivalling Ethereum. It's trying to take advantage of the shortcomings in the Ethereum network like high transaction time and high costs.
How does Avalanche work?
Avalanche provides a blockchain platform that allows developers to build custom blockchain networks and decentralized apps. NFTs are also fully supported on its network. Avalanche works on the energy-efficient PoS (Proof-of-Stake) technology. Apart from Ethereum, Cardano, Solana, Polkadot, and Elrond are also competing in the same space. The AVAX token facilitates transactions on the Avalanche blockchain and acts as a reward and payment system for customers.
Why is Avalanche rising?
One of the recent positive developments for Avalanche has been the $230 million funding raised through the sale of AVAX tokens. The private investment was led by Polychain and Three Arrows Capital. The funding news propelled AVAX to an all-time high of $76.3 on Sept. 24. The Avalanche Foundation will use the proceeds from the private sale to support and accelerate the growth of DeFi, enterprise applications, and other use cases on its blockchain.
Avalanche's 2025 price prediction
- Wallet Investor has a bullish price prediction for Avalanche token and sees it rising by 66 percent in a year and nearly 290 percent in five years.
- Gov.Capital has even more optimistic price estimate and expects the token almost triple in one year and rise by more than 2,000 percent in five years.
- Digital Coin Price expects AVAX to end 2021 with a gain of 50 percent from the current levels. The firm sees gains of nearly 200 percent for the token by 2025.
Avalanche’s recent token offering has seen an overall positive sentiment from crypto analysts, which has also led to an increase in its price targets.
Is Avalanche a good long-term investment?
More than 270 projects are building on the Avalanche platform, including DeFi projects like Tether, SushiSwap, Chainlink, and The Graph. More projects are coming to the Avalanche network and the current ones are expanding. On Sept. 21, Avalanche added Yield Yak, a native DApp on its platform, to its Avalanche Rush program.
Avalanche Foundation is working diligently to expand the use cases on its blockchain and to invest more in accelerating DeFi and enterprise applications. This bodes well amid the DeFi and NFT boom. AVAX token has a capped supply, which eliminates inflation risk for investors. After hitting a record high recently, AVAX token could see more gains as developers continue to seek better alternatives to Ethereum. Avalanche has positioned itself as a strong contender.
However, this doesn’t mean that there won’t be short-term fluctuations. In fact, cryptos are characterized by high volatility, and Avalanche isn't expected to be any different. Therefore, it's mostly for highly risk-tolerant investors. Long-term investors should use any dip (like the current one) to add to their positions.