What happened
One of the best-performing cryptocurrencies in recent weeks, Avalanche (AVAX 0.51%) has once again exploded higher today. As of 9:45 a.m. ET, Avalanche has soared 13.6% higher over the past 24 hours. Over the past week, this token has gained more than 45% on an impressive rally that has taken Avalanche into the top 10 in terms of market capitalization.
Broadly, stock and crypto markets have recovered today following news that President Joe Biden's Build Back Better plan may not be completely dead in the water. Sen. Joe Manchin reportedly spoke with Biden yesterday evening, stoking bets that this stimulative deal may still have legs.
However, token-specific catalysts that have provided momentum for Avalanche over the past week also seem to be buoying this token. Specifically, investors appear to be focusing on on a key BofA analyst note from last week singling out Avalanche as a credible alternative to Ethereum due to this platform's "faster time-to finality (settlement) and lower costs than alternative blockchains."
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So what
Importantly, today's increase brings Avalanche within 20% of its all-time high set approximately one month ago. Like many of the fastest-growing tokens in the market, Avalanche has entered into bear market territory as investors appear to be in de-risking mode. However, today's macro news seems to have investors in risk-on mode once again.
For tokens like Avalanche with incredible momentum built atop some strong catalysts, today certainly looks like a perfect storm. Any token that's put in the same discussion as Ethereum is worth considering.
Much of the attention Avalanche has received of late is due to the blockchain's accelerated adoption by developers and users, particularly in the decentralized finance (DeFi) space, as well as the non-fungible token (NFT) and gaming segments. One of the key measures investors look at with respect to growth in the DeFi world is total value locked (TVL) -- Avalanche has reportedly surged past other scaling platforms such as Solana and Polygon in terms of TVL. Currently, total value locked on the Avalanche network sits around $12 billion, which is quickly approaching 10% of the roughly $150 billion in TVL held on the Ethereum network.
Now what
Given Avalanche's relatively low fees and fast transaction speeds, experts have singled out Avalanche as a network with serious growth potential relative to the field. Looking at the numbers behind this analysis, this thesis certainly appears to have legs.
Of course, Ethereum is battling other high-profile "Ethereum-killers" for market share in the growing DeFi world. Picking a specific token that will ultimately be a DeFi market share leader isn't as easy as one might think. Avalanche is certainly highly scalable and has impressive metrics right now. However, the slowing of other low-cost, high-speed networks (such as Solana) could foreshadow a not-so-linear growth path for Avalanche over the medium term.
That said, it's clear that expectations are starting to build for Avalanche as a true Ethereum competitor. Now that Avalanche is a top-10 token by market capitalization, it's also likely that Avalanche will receive more attention moving forward.
Where this token goes from here will certainly be intriguing to watch. This is a token I've got on my watch list right now.
