AVAX price has seen strong bullish movement due to the Avalanche Foundation’s plan to buy back 1.97 million tokens sold to the Luna Foundation in 2022.

AVAX price surged a staggering 10% in the past few hours after the Avalanche Foundation recently announced a buyback agreement with Luna Foundation Guard (LFG), an entity associated with the Terra blockchain, to buy back all tokens sold in 2022. This brought the price of AVAX close to $30 and its market cap to over $11.5 billion.

Avalanche reaches agreement with Luna Foundation

According to the latest announcement, the Avalanche Foundation has reached an agreement to buy back all AVAX tokens sold to the Luna Foundation Guard (LFG) in April 2022. However, the deal is currently awaiting approval from the bankruptcy court. The announcement brought a huge bullish momentum to the AVAX price as bulls rushed to fill their bags ahead of time.

LFG held a total of 1.97 million AVAX tokens, worth up to $60 million, before its bankruptcy in the summer of 2022. The Luna Foundation purchased AVAX as part of its reserves to bolster the strength of its UST stablecoin.

This strategic decision by the Avalanche Foundation will prevent LFG from violating the original agreement and limiting the use of AVAX tokens. In addition, this move by Avalanche will protect assets from the complexity of liquidation by a bankruptcy trustee. Earlier this year, LFG began transferring its tokens after Terraform Labs reached a settlement with the U.S. Securities and Exchange Commission.

Upon completion, the Avalanche Foundation will reclaim 1.97 million AVAX tokens, enhancing its ability to foster growth and development of the Avalanche ecosystem.

Will the AVAX price rally continue?

The buyback of AVAX tokens provides a significant catalyst for AVAX price and boosts investor confidence. The Avalanche Foundation’s massive purchase of 1.97 million tokens will significantly reduce the circulating supply of AVAX, thereby creating upward price pressure on the altcoin.

At press time, Avalanche stock is up 9.33% and trading at $28.49. On the technical chart, AVAX price has also perfectly broken out of a descending wedge pattern that has been forming over the past few months.

Furthermore, AVAX’s relative strength index (RSI) is around 49.8, while the moving average convergence divergence (MACD) is positive at 0.19, indicating strong bullish momentum. Crypto analyst “Crypto Winkle” suggests that AVAX’s price will surge further if the bulls succeed in breaking through the critical resistance above $30. Market analysts have already predicted that Avalanche’s price will rise to $50.

Additionally, the Avalanche blockchain is becoming the preferred choice for traditional financial players to launch products to the market. Earlier this week, Colombian neo-bank Littio moved its foundation from Ethereum to the Avalanche blockchain.