Why Avalanche is crushing the crypto market

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What happened

It’s been a tough week of trading for most of the major cryptocurrencies, but the Avax token of Avalanche (CRYPTO: AVAX) is going against the trends and showing big gains. At 3 p.m. EDT on Friday, the token was up about 13% since last Friday.

Avalanche price data by YCharts

Meanwhile, Bitcoin, Ethereum, Dogecoin, and Cardano fell around 10.3%, 14.5%, 13.8%, and 4%, respectively, on the same stretch. Avalanche’s AVAX token still appears to live up to the announcement of a major private investment in Avalanche that was announced last week.

Image source: Getty Images.

So what

Fears that an impending default by real estate giant China Evergrande could spill over into the cryptocurrency market caused major tokens to fall earlier in the week. Investors got another scare on Friday after China announced what effectively amounts to a cryptocurrency trading ban. The country’s government has cracked down on crypto trading, mining, and lending in the past, but it appears to be the most drastic action yet.

Still, these developments didn’t seem to confuse investors much after last week’s news that Avalanche had secured $ 230 million in funding through the sale of its AVAX tokens. The private investment was led by Polychain and Three Arrows Capital, and represented a major vote of confidence in the Avalanche blockchain that prompted some crypto analysts to dramatically increase their price targets on the token.

Now what

AVAX has proven remarkably resilient despite pressures from Evergrande’s default situation in China and comments from Chinese regulators suggesting a ban on crypto trading in the country. This resilience and the significant private investment are positive signs; they suggest that there is real excitement surrounding the Avalanche blockchain and its token.

Avalanche provides a blockchain platform for building and running decentralized applications, and it is emerging as a competitor to Ethereum and other blockchain platforms offering similar functionality. For crypto investors, there is still a lot of risk on the table, but AVAX’s ability to post gains in an otherwise troubled week is remarkable.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a premium Motley Fool consulting service. Were motley! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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