therefore an investment in the Shares. The further adoption of AVAX will require growth of the Avalanche Network. Adoption of AVAX will also require an accommodating regulatory environment. The use of digital assets such as AVAX to, among other things, buy and sell goods or services or facilitate cross-border payments is part of a new and rapidly evolving industry that employs digital assets based upon computer-generated mathematical and/or cryptographic protocols. The Avalanche Network is a prominent, but not unique, part of this industry. The growth of this industry is subject to a high degree of uncertainty, as new assets and technological innovations continue to develop and evolve. Today, speculators make up a significant portion of users of AVAX and other cryptocurrencies. Certain merchants and major retail and commercial businesses have only recently begun accepting AVAX and the Avalanche Network as a means of payment for goods and services. Speculation may contribute to outsized price volatility, which in turn can make AVAX less attractive to merchants and commercial parties as a means of payment. A lack of expansion by AVAX into retail and commercial markets or a contraction of such use may result in a reduction in the price of AVAX, which could adversely affect an investment in the Trust. In addition, there is no assurance that AVAX will maintain its value over the long term. The price of AVAX is subject to risks related to its usage. Even if growth in Avalanche Network adoption occurs in the near or medium term, there is no assurance that AVAX usage will continue to grow over the long term. A contraction in use of AVAX may result in increased volatility or a reduction in the price of AVAX, which would adversely impact the value of the Shares. The Index Price used to calculate the value of the Trust’s AVAX may be volatile, and purchasing and selling activity in the Digital Asset Markets associated with Basket creations and redemptions may affect the Index Price and Share trading prices, adversely affecting the value of the Shares. The price of AVAX on public Digital Asset Trading Platforms has a very limited history, and during this history, AVAX prices on the Digital Asset Markets more generally, and on Digital Asset Trading Platforms individually, have been volatile and subject to influence by many factors, including operational interruptions. While the Index is designed to limit exposure to the interruption of individual Digital Asset Trading Platforms, the Index Price, and the price of AVAX generally, remain subject to volatility experienced by Digital Asset Trading Platforms, and such volatility could adversely affect the value of the Shares. For example, since the commencement of the Trust’s operations, the Index Price ranged from $11.36 to $54.44, with the straight average being $25.05 through December 31, 2025. In addition, during the twelve months ended December 31, 2025, the Index Price ranged from $11.36 to $44.28, with the straight average being $22.51. The Sponsor has not observed a material difference between the Index Price and average prices from the constituent Digital Asset Trading Platforms individually or as a group. The price of AVAX more generally has experienced volatility similar to the Index Price during these periods. See “Business—Overview of the Avalanche Industry and Market—Historical AVAX Prices.” Furthermore, because the number of Digital Asset Trading Platforms is limited, the Index will necessarily be comprised of a limited number of Digital Asset Trading Platforms. If a Digital Asset Trading Platform were subjected to regulatory, volatility or other pricing issues, the Index Provider would have limited ability to remove such Digital Asset Trading Platform from the Index, which could skew the price of AVAX as represented by the Index. Trading on a limited number of Digital Asset Trading Platforms may result in less favorable prices and decreased liquidity of AVAX and, therefore, could have an adverse effect on the value of the Shares. Purchasing activity associated with acquiring AVAX required for the creation of Baskets may increase the market price of AVAX on the Digital Asset Markets, which will result in higher prices for the Shares. Alternatively, selling activity associated with sales of AVAX withdrawn from the Trust in connection with the redemption of Baskets may decrease the market price of AVAX on the Digital Asset Markets, which will result in lower prices for the Shares. Increases or decreases in the market price of AVAX may also occur as a result of the purchasing or selling activity of other market participants. Other market participants may attempt to benefit from an increase or decrease in the market price of AVAX that may result from increased purchasing or selling activity of AVAX connected with the creation or redemption of Baskets. Consequently, the market price of AVAX may decline immediately after Baskets are created. Decreases in the market price of AVAX may also occur as a result of sales in Secondary Markets by other market participants. If the Index Price declines, the value of the Shares will generally also decline.
41
Made with FlippingBook - professional solution for displaying marketing and sales documents online