A sharp drop in TVL and DApp usage preceded Avalanche's 16% correction (AVAX)
AVAX price gave up recent gains after correcting 16% and lower TVL and DApp usage by the network suggests that the protocol is losing ground to its competitors.
Altcoin Watch
After an impressive 73% rally between July 13 and August 13, Avalanche (AVAX) faced a 16% rejection from the $30.30 resistance level. Some analysts will try to call the correction a "technical adjustment", but network repositories and decentralized apps reflect worsening conditions.
Avalanche Index (AVAX), USD . Source: TradingViewAs of today, Avalanche remains 83% below its November 2021 all-time high at $148. More data than technical analysis can be analyzed to explain the 16% price drop, so let's look at network usage in terms of deposits and users.
The decentralized application platform (DApp) is still among the top 15 competitors with a market capitalization of $7.2 billion. Meanwhile, Solana (SOL), another proof-of-work (PoW) Layer 1 platform, has a market capitalization of $14.2 billion, nearly twice that of Avalanche. /p> Avalanche's TVL drops 40% in two months
Some analysts tend to place too much weight on Total Value Locked (TVL) and while this may be relevant for the Decentralized Finance (DeFi) sector, it is rarely necessary for minting non-fungible tokens ( NFT), marketplaces for digital items, crypto games, gambling, and social apps.
Using the Polygon (MATIC) layer 2 solution as a proxy, it currently holds a TVL of $2.2 billion, while MATIC's market cap is $7.2 billion; thus, an MCap/TVL ratio of 3.3x. Curiously, the same ratio applies to Avalanche, which currently holds a similar TVL of $2.2 billion and market capitalization of $7.2 billion.
Total locked avalanche value, AVAX. Source: DefiLlamaAvalanche's main DApp metric began to show weakness in late July after TVL fell below 110 million AVAX...
AVAX price gave up recent gains after correcting 16% and lower TVL and DApp usage by the network suggests that the protocol is losing ground to its competitors.
Altcoin Watch
After an impressive 73% rally between July 13 and August 13, Avalanche (AVAX) faced a 16% rejection from the $30.30 resistance level. Some analysts will try to call the correction a "technical adjustment", but network repositories and decentralized apps reflect worsening conditions.
Avalanche Index (AVAX), USD . Source: TradingViewAs of today, Avalanche remains 83% below its November 2021 all-time high at $148. More data than technical analysis can be analyzed to explain the 16% price drop, so let's look at network usage in terms of deposits and users.
The decentralized application platform (DApp) is still among the top 15 competitors with a market capitalization of $7.2 billion. Meanwhile, Solana (SOL), another proof-of-work (PoW) Layer 1 platform, has a market capitalization of $14.2 billion, nearly twice that of Avalanche. /p> Avalanche's TVL drops 40% in two months
Some analysts tend to place too much weight on Total Value Locked (TVL) and while this may be relevant for the Decentralized Finance (DeFi) sector, it is rarely necessary for minting non-fungible tokens ( NFT), marketplaces for digital items, crypto games, gambling, and social apps.
Using the Polygon (MATIC) layer 2 solution as a proxy, it currently holds a TVL of $2.2 billion, while MATIC's market cap is $7.2 billion; thus, an MCap/TVL ratio of 3.3x. Curiously, the same ratio applies to Avalanche, which currently holds a similar TVL of $2.2 billion and market capitalization of $7.2 billion.
Total locked avalanche value, AVAX. Source: DefiLlamaAvalanche's main DApp metric began to show weakness in late July after TVL fell below 110 million AVAX...
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