Key Insights
- Avalanche Foundation is raising $1 billion for two U.S. crypto treasury companies.
- The funds will go toward buying millions of AVAX tokens at a discount.
- AVAX price surged 8% on the news, as DeFi activity and institutional testing increased.
Avalanche Foundation is working to raise $1 billion to establish two crypto treasury companies in the United States. The effort is aimed at expanding Avalanche’s reach on Wall Street and strengthening the blockchain’s presence in corporate treasury strategies.
More Details Of This Move
The plan involves creating one new treasury-focused company and converting an existing firm into a treasury vehicle.
Both deals are currently in advanced talks with investors, according to the Financial Times. The foundation expects to secure funding over the coming weeks.
Funds raised will be used to purchase millions of AVAX tokens directly from the foundation, at discounted prices. Avalanche hopes to draw institutional buyers into its ecosystem by offering AVAX at a discount.
How the Treasury Deals Are Structured
Hivemind Capital is heading the first of the two transactions. It involves a private investment of up to $500 million in a Nasdaq-listed company. SkyBridge Capital’s Anthony Scaramucci is also advising on the deal, which could close by the end of September.
Dragonfly Capital is sponsoring the second project through a special purpose acquisition vehicle (SPAC). This vehicle is targeting $500 million in funding, and the deal is expected to conclude in October.
Together, the two treasury vehicles are expected to buy large quantities of AVAX tokens from the foundation’s holdings. Out of the 720 million maximum supply, around 420 million AVAX are currently in circulation.
This gives the treasury firms a lot of room to accumulate.
AVAX Price Reacts to Treasury Push
The announcement had an immediate effect on the market. AVAX surged more than 8% in the past 24 hours.
Transaction activity also climbed and saw nearly 12 million transactions processed on the network within a single week.
DeFi activity, memecoin trading and an increased use of Avalanche’s C-Chain all supported the rally. Technical analysis even indicates that a breakout above $29.9 could open the path toward $31 and $34 price levels.
However, there are a few challenges. The U.S. Securities and Exchange Commission (SEC) delayed both Grayscale’s bid to list an Avalanche Trust on Nasdaq and VanEck’s Avalanche ETF proposal.
Institutional Interest in Avalanche
Avalanche is betting on strong institutional demand. Several major firms have already tested tokenised investment funds on the blockchain, and some of the biggest participants include BlackRock, Apollo and Wellington Asset Management.
These experiments show that Avalanche is setting itself up as a serious player in tokenisation. This, for context, is also an area that is expected to grow in the coming years.
Challenges and Competition
Despite the fundraising plan, Avalanche is still facing stiff competition from Ethereum and Solana. Both chains have seen higher adoption rates and stronger price performance this year.
This said, Avalanche must prove that its treasury push can bring unique value.
Another challenge is the slow performance of publicly traded crypto treasury firms. For example, Solana’s treasury company, SOL Strategies, started trading on Nasdaq with little excitement. Avalanche is taking a different approach, but there is still a risk of limited market response.
Regulatory delays can also complicate progress. Until ETFs and trust products gain approval, institutional exposure to AVAX will likely rely heavily on private investment vehicles (like the ones currently being planned).
What This Means for Investors
Avalanche’s $1 billion fundraising effort shows that it is serious about institutional adoption. The foundation’s attempts to link treasury firms to AVAX token purchases mean that it is creating a clear channel for long-term demand.
Investors should note that this could mean more price stability, compared to previous cycles where retail activity drove most of the growth.
