Avalanche's Terra move: AVAX price may move!

The Avalanche Foundation is preparing to buy back 1.97 million AVAX tokens it sold a month before the Terra ecosystem collapsed.

The Avalanche Foundation will buy 1.97 million AVAX from Terraform Labs' bankruptcy estate for $45.5 million. The market value of these tokens is $57.4 million. In its X post dated October 11, the foundation said that the October 9 repurchase agreement and settlement filed in the Delaware Bankruptcy Court is currently awaiting court approval.

The foundation stated that it supports Layer-1 blockchain Avalanche, and said, "This move ensures that the tokens in question will be protected by a bankruptcy trustee, while returning 1.97 million AVAX to the foundation's assets."

Terraform Labs stated in its filing that the agreement will reduce litigation costs and reduce the assets that can be distributed. The company added that it will allow 1.97 million AVAX to recover an amount close to its current market value.

The payment amount was obtained based on the volume-weighted average price of AVAX in early August 2024. LFG is a non-profit organization that creates and maintains reserves for Terra’s stablecoin TerraClassicUSD ($USTC ) and uses these reserves to purchase the token.

Less than a month later, USTC lost its peg to the US dollar and fell to $0.006. Terraform Labs, the company behind Layer-1 blockchain Terra, swapped $100 million worth of Terra Luna Classic (LUNC) for $AVAX in April in order to “strategically align ecosystem incentives.”

AVAX, which is changing hands at $29.31 as of writing, could target the $36 resistance if it exceeds $30. The $25 band can be followed as support in downward price movements. Investors should closely follow the news flow regarding Bitcoin price, Bitcoin dominance and the Avalanche ecosystem during this process.

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