Try Quests to earn AVAXAVAX- Up The Mountain
Question:
An Avalanche has been building up steam as of late — the price of AVAX rose by nearly 100% in the month of January and BTC hodlers have been moving holdings to the Avalanche chain.
What’s been fueling this growth over the past month — and what does the future hold for Avalanche?
Will this growth continue into the new year? Or will growth stagnate as 2023 continues to progress?
Overview of analysis:
In this investigation, the recent spike in the price of AVAX has been determined, and this investigation is divided into three parts:
- Track the price of AVAX and compare it with other popular tokens
- Track the bridge and transfer volume of BTC on Avalanche
- Track the flow of AVAX into the CEXs
- The trading activity of the AVAX token
This analysis is done since the start of January 2023 and the various aspects of AVAX price change can be seen from the following parts.
About Avalanche blockchain and AVAX:
Avalanche, like several other projects, is a platform for smart contracts and decentralized applications and was created with the aim of solving Ethereum's shortcomings. Avalanche's focus is on scalability, and by providing a new architecture and structure, it has tried to process a large number of transactions in an instant, while also providing an acceptable amount of decentralization.
In a way, Avalanche seeks to create conditions for global asset exchange that allows anyone to launch or trade any type of digital asset and control it in a decentralized manner using smart contracts and other advanced technologies. The Avalanche platform uses a new approach to the consensus to achieve strong security guarantees while achieving fast finality and high throughput without compromising decentralization. Unlike other networks that uniformly impose terms and conditions of network participation on the system, Avalanche empowers individuals and institutions to easily create powerful, reliable, and secure applications and custom blockchain networks with complex rules, or in networks Available private or public work according to their use cases.
One of the differences between Avalanche and other decentralized networks is its consensus protocol. The consensus protocol optimized in Avalanche for smart contracts is called Snowman. Avalanche also uses DAG or Directed Circular Graph as a distributed ledger.
Methodology:
The data provided by Flipside has been used to handle this analysis.
The following steps have been used to handle this investigation:
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Step 1: Price Analysis
- Metrics→ Over time price, daily price change in %, total price drop in %
- Popular tokens→ BTC, ETH and MATIC
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Step 2: Determine the activity of BTC holders on Avalanche
- Find out the bridge of BTC into the Avalanche
- Track the transfer of BTC on the Avalanche network
Step 3: AVAX flow onto CEXs
- Metrics→ Inflow/outflow volume, Net flow, Distinct senders and receivers
- CEXs→
from ethereum.core.dim_labels where label_type='cex'
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Step 4: Trade analysis of AVAX
- Metrics→ Swap count, unique swappers, the volume of the swap, swap type (from and to), Average swap volume
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Step 5: Draw a conclusion by aggregating outcomes of previous steps
Key Findings:
The trading activity of AVAX since the start of 2023 has been evaluated in this part:
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The average volume of buying AVAX is more than selling AVAX since the start of 2023.
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January 11 has the highest volume of net buying AVAX with more than 275 bought AVAX volume and it coincided with the price spike on the related date.
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Due to the high pressure of buy on AVAX, the price of tokens enhanced dramatically on that dates.
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Key Findings:
After investigating the activity of BTC holders on Avalanche, the AVAX flow onto the CEXs has been analyzed and the outcomes are as below:
- Since the start of 2023, the average AVAX receiver from CEXs is more than AVAX senders into the CEXs.
- The highest volume of transferred AVAX from CEXs occurred on January 11th with more than 624k tokens.
- The net AVAX flow into the CEXs and the price of AVAX have been depicted in the same chart. Based on this content, the net AVAX flow into the CEXs coincided with the price spike but a complete correlation did not recognized.
Key Findings:
This part tracks the activity of BTC holders on the Avalanche network:
- According to the outcomes, the highest volume of the net bridges into the Avalanche network occurred on January 13 and it coincided with the highest price enhancement for the AVAX token.
- The largest group of BTC holders bridged their BTC into the Avalanche happened on February 1st with 82 unique wallets.
- Besides bridging BTC into the Avalanche network, the interchain transfer of BTC has been demonstrated in the related charts, too.
- Based on the results, there is a positive correlation between the 7-day moving average volume of BTC transfer and the price of AVAX.
Why did this happen?
Ethereum is the world's largest smart contract blockchain and BTC holders seek to access the Ethereum-based DeFi programs. For this purpose, they should mint the wrapped bitcoin token called WBTC. The process is handled by merchants such as Loopring, DeversiFi, and the custodian BitGo. So BTC holders bridged their assets into the Avalanche to make requests for WBTC.
Key Findings:
The first part of this analysis investigates the price of AVAX and other popular currencies:
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The increasing pattern of AVAX price since January 2023 is visible.
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The AVAX has experienced about a 34% price increase since the start of 2023 and compared to MATIC as a native token of another L2 chain it experienced less.
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The price deviation on a daily basis demonstrated that the highest price increase occurred on January 13 with an over 30% rise.
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The 7 and 15 day moving average price of AVAX currency reveal the slope of price increase averagely.
The aim of this content is to find out the reasons of this price increament since start of January 2023.
Conclusion:
As mentioned in the methodology section by aggregating the consequences of the previous parts the following statements have been drawn:
- Bitcoin is considered the leader of the crypto market. Therefore, the behavior of its holders has a significant impact on related networks as well as the price of other digital currencies. As indicated in the results, at the same time as Bitcoin entered the Avalanche network, the price of Avax experienced significant growth. It is also mentioned in the main text that the reason for this asset transfer to the Avalanche network is to benefit from the projects of the Ethereum network through the use of WBTC.
- The general state of the crypto universe and the price of AVAX will stabilize and increase due to the increase in public trust in crypto projects.
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