Avalanche Foundation plans to repurchase 1.97 million AVAX tokens worth $60M, boosting the price by 7.5%.
AVAX's circulating supply will decrease, potentially increasing demand and pushing prices higher.
Institutional interest in Avalanche is rising, with Colombian neobank Littio migrating from Ethereum to Avalanche.
The Avalanche Foundation has made a significant move by announcing a repurchase agreement with the Luna Foundation Guard (LFG). This agreement is set to reclaim 1.97 million AVAX tokens, which LFG initially acquired in 2022 as part of its reserves. The deal has triggered a substantial surge in AVAXâs price, rising by 7.5% within hours of the announcement.
As of the time of writing, AVAX is trading at $28.20, edging closer to the $30 mark. However, the completion of the repurchase agreement remains contingent on court approval, as LFG is undergoing bankruptcy proceedings.
https://twitter.com/AvalancheFDN/status/1844825065889907158 Repurchase to Reduce AVAX Supply
Notably, upon the agreementâs finalization, the Avalanche Foundation will regain ownership of the 1.97 million tokens, valued at $60 million. This buyback will lead to a significant reduction in AVAXâs circulating supply.Â
Consequently, investors are optimistic about a continued upward trend in the price of AVAX. This reduction in supply is expected to put upward pressure on the token, as reduced supply typically increases demand in the market. The buyback is also expected to protect AVAX tokens from potential liquidation risks associated with LFGâs bankruptcy.
Technical Indicators Point to Bullish Momentum
More so, the price surge has been supported by favorable technical indicators. On the chart, AVAX has been forming a breakout from the falling wedge pattern over the past few months.Â
Additionally, the Relative Strength Index (RSI) for AVAX currently stands at 49.8, reflecting neutral territory, while the Moving Average Convergence Divergence (MACD) has turned positive, indicating growing bullish momentum. These signals have encouraged traders to accumulate AVAX, with analysts predicting that the token could rise to $50 if key resistance levels are breached.
https://twitter.com/CryptoWinkle/status/1844365705942049072 Avalanche Blockchain Gains Favor Among Financial Institutions
Beyond the token repurchase, Avalanche is gaining traction in the traditional finance sector. Earlier this week, Colombian neobank Littio announced its decision to migrate from the Ethereum blockchain to Avalanche. This move highlights growing institutional interest in Avalanche as a preferred blockchain platform.Â
Moreover, the networkâs scalability and performance are becoming attractive to financial institutions seeking blockchain solutions, further bolstering investor confidence in AVAX. The buyback, combined with institutional interest, has created a positive outlook for the ecosystemâs long-term growth.
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