- AVAX rose 11.03%, signaling potential opportunities for traders.
- Declining social volume and sentiment led to fears for AVAX’s future.
Avalanche [AVAX] emerged as a standout performer among altcoins in the early days of the new year, with impressive price growth. According to the latest data, AVAX was trading at $36.68.
In the last 24 hours, it had experienced an impressive 11.03% increase.
A sudden spike
This sudden increase in the price of AVAX can have both positive and negative consequences for traders.
On the one hand, the substantial price growth offers opportunities for gains, but on the other hand it raises concerns about potential market volatility and corrections.
However, recent developments indicated that things were more complicated than they first appeared. Notably, despite AVAX’s positive momentum, social volume has dropped significantly in recent days.
Weighted sentiment around AVAX also declined during this period, indicating an increase in negative comments within the community. This shift in social dynamics could influence traders’ perceptions and influence AVAX’s trajectory.
If weighted sentiment remains negative, retail interest in AVAX could be affected, which could push the token’s price down in the future.
Source: Santiment
Burnt-out!
In addition to the above developments, the Avalanche network also experienced a massive increase in token burns during transactions, leading to a significant reduction in circulating supply.
AVAX burns peaked in the fourth quarter of 2023, with 195,000 token burns recorded in December, a significant increase compared to previous patterns.
Source: AVASCAN
This increase in the number of AVAX tokens can be attributed to the growing prevalence of Inscription-related transactions on Avalanche and other blockchain networks.
Initially rooted in Bitcoin [BTC]Subscription-based transactions now contribute significantly to transaction fees and subsequent token burns on Avalanche.
Read Avalanche [AVAX] Price forecast 2024-25
Data from a Dune Analytics dashboard showed that inscription-related transactions represented more than 75% of transaction fees and 90% of transactions during peak hours.
Source: Dune Analytics
Thus, the continued prominence of inscription-related transactions, along with AVAX’s token burns and distinctive fee mechanism, could play a crucial role in shaping AVAX’s 2024 trajectory.