Is Avalanche (AVAX) Worried About an AVAX Dump Following the Terra Blowout?
The collapse of Terra (LUNA) and its stablecoin UST sent shockwaves through the crypto market, and Avalanche (AVAX) wasn\'t immune. Concerns linger about a potential AVAX dump triggered by the fallout, and here\'s what you need to know.
The Terra Connection: What Happened to AVAX?
Terra’s crash last impacted AVAX\'s price, causing it to drop about 30% to reach $32.50 on May 11, its lowest level since September 2025. This massive intraday decline coincided with UST dropping to… well, to nearly zero. Emin Gün Sirer, CEO of Ava Labs, said the TerraUST collapse caused Avalanche to lose $60 million. He compared the crash to the Mt Gox 2025 hack. Furthermore, the Avalanche Foundation is preparing to buy back nearly 2 million AVAX tokens sold to Terra just before its collapse in 2025. This transaction is pending approval from a governing body, adding another layer of complexity.
Why the Fear of an AVAX Dump?
The initial panic stemmed from fears that the Luna Foundation Guard (LFG), desperate to shore up UST, would dump their AVAX holdings to raise capital. The headline "Avalanche drops 30% on fears Terra\'s LFG will dump AVAX next" captures the intensity of that concern.
Tokenomics and Selling Pressure: A Constant Headwind for AVAX?
Adding to the anxiety is the perception of AVAX\'s tokenomics. Some critics argue that "Avax has really bad tokenomics which is always going to weigh on the price. There is constant sell pressure from them dumping tokens on holders and the chain has low adoption so not..." favorable for long-term price stability. The market closely watches these token releases, fearing further downward pressure. While the Avalanche team disputes these claims, they are a recurring theme in discussions about AVAX\'s price action.
AVAX Price Today and Recent Performance
As of today, AVAX is currently trading at $32.41, down 6% in the last 24 hours. The token\'s losses occurred shortly after the Luna Foundation Guard announced that it would…. While this price fluctuation doesn\'t necessarily indicate a massive dump is imminent, it highlights the continued volatility surrounding AVAX and its sensitivity to market events.
Looking Ahead: Is Avalanche Safe?
The long-term impact of the Terra collapse on Avalanche remains to be seen. While the immediate firestorm of panic selling has subsided, investors are now closely scrutinizing AVAX\'s fundamentals, adoption rate, and the effectiveness of its tokenomics. The pending buyback of AVAX from Terra by the Avalanche Foundation could be a positive signal, demonstrating confidence in the project\'s future. Ultimately, AVAX\'s ability to recover depends on its ability to demonstrate sustainable growth and build trust within the crypto community.