Avalanche Endures Wild Ride Amid Debate
Crypto Briefing | Nov 24, 2021 12:28AM ET
- Avalanche could be bound for further losses as transaction fees on the network skyrocket.
- The average gas fee on the Avalanche network has surged this week after the AVAX price hit a new all-time high.
- The rising transaction costs appear to have encouraged investors to sell.
- The price action is in the wake of public debate surrounding rival Layer 1s, Avalanche, and Ethereum.
Avalanche’s AVAX token recorded another all-time high of $144.96 Sunday amid intense debates between some prolific industry figures concerning the Avalanche blockchain and Ethereum. On Monday, however, Avalanche experienced a tenfold increase in transaction costs as the network processed more than 669,000 transactions, which appears to have caused some panic among investors as AVAX’s market value dropped significantly shortly after.
h2 Public Debate and Apology/h2AVAX’s volatile price action the last few days has taken place amid some public debate between industry figures. Three Arrows Capital CEO Su Zhu, who publicly shared optimistic price targets for Ethereum ahead of EIP-1559 launching.
But he has more recently turned his focus to Avalanche (Three Arrows Capital announced it had co-led Avalanche’s $230 million raise in September), engaged in a heated discussion with Synthetix founder Kain Warwick, who posted a tweet noting that he had observed many crypto enthusiasts that had “sold out in pursuit of profit maximization.”
Zhu wrote in a tweet that he had “abandoned Ethereum” and that Ethereum had “abandoned its users,” arguing that the cost of using Ethereum had priced out newer users and made less expensive solutions like Avalanche more viable alternatives. He wrote,
“The idea of sitting around jerking off watching them burn and concocting purity tests, while zero newcomers can afford the chain, is gross,”
Several developers working on Ethereum and projects in the Ethereum ecosystem publicly criticized Zhu for his comments. Zhu also posted price charts highlighting Avalanche’s parabolic rally throughout the weekend then apologized for his statements on Ethereum.
h2 Avalanche Plunges While Gas Fees Surge/h2Sometimes referred to as a so-called “Ethereum killer,” Avalanche competes by providing users with “blazingly fast” and low-cost transactions.
Despite the significant endorsement from Zhu, Avalanche could be falling short of meeting expectations. The smart contracts blockchain has seen transaction fees skyrocket. A sudden spike in network traffic pushed gas fees as high as $10, with the average gas fee reaching 153 nAVAX.
Get The News You Want
As transactions fees surged to record highs, Avalanche’s market value suffered the most. The DeFi token took a 16% nosedive, going from an all-time high of $144 to hitting a low of $124.60 recently. Further selling pressure around the current price levels could result in further losses.
A daily candlestick close below $125 might push Avalanche to the $110 or even the $100 support level.
It is worth noting that the development team behind Avalanche is already working on different ways to optimize the network and support high demand, low finality, and low fees. As these solutions begin to be implemented, the chances for AVAX the rebound increase.
A downswing to $110-$100 could serve as a buying opportunity for sidelined investors to get back into the market. A rebound from such a crucial support barrier may have the strength to catapult Avalanche towards a new all-time high of $173.
Original Post
/h2
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.