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Avalanche (AVAX) price drops by 45% in one month and the data causes further trouble

Avalanche (AVAX) declined 45% in 30 days and total market capitalization of cryptocurrencies shrank by 29%.

Despite the recent downturn, this decentralized application (DApp) remains the top contender in the Platform Layer-1 and Layer-2 race, and is ranked higher in terms of smart contract deposits and active addresses. Still, the poor token price causes investors to rethink whether the network remains a “serious” competitor.

AVAX Token / USD on FTX. Source: Trading View

The brutal sale on risk assets has led AVAX to test $ 14.80 support multiple times, but the current market capitalization is $ 4.8 billion. It is important to note that the Network’s Total Value Locked (TVL) has an impressive $ 3.2 billion.

By comparison, Solana (SOL) offers incredibly low network fees and has $ 2.1 billion TVL. However, the market cap of the SOL token is $ 12.9 billion, which is nearly three times the value of Avalanche at $ 14.80.

The TVL Indicator is very relevant because it measures the deposits in the network’s smart contracts. If we use Polygon (MATIC), the Ethereum Layer-2 solution as a proxy, the network has $ 1.8 billion TVL, and the market capitalization of the token is $ 3.5 billion.

In a nutshell, Avalanche seems highly discounted considering how market capitalization of similar networks outperforms their TVL.

The total value of the lock is increased, but the number of users declined

Avalanche’s primary decentralized application metric has grown in the last 60 days as the network’s TVL jumped to 184 million AVAX tokens. This suggests that investors have not withdrawn tokens from its decentralized applications (DApps), even though the AVAX price has fallen.

Sudden network total value locked, AVAX. Source: Defilama

In terms of AVAX tokens, the network’s TVL has effectively grown 35% in two months. By comparison, Ethereum’s TVL increased 10% in ether terms, while the BNB chain suffered a 14% reduction in the same period.

To ensure that TVL increases in availability are exciting, merchants should analyze DApp usage metrics. Some applications, such as games and marketplaces, do not require large deposits, so the metric does not matter in those cases.

Avalanche DApps 30-Day Data. Source: DappRadar

As DappRadar shows, on June 21, the number of Avalanche network addresses interacting with decentralized applications decreased by 42% compared to the previous month. By comparison, the BNB chain experienced a 16% decrease in users, while the polygon fell by 29%.

The price follows the basics, which is lower

While Avalanche’s TVL outperforms competing DApp networks, the reduction in network usage is a concern. For example, Trader Joe’s 93,130 active addresses are smaller than QuickSwap, the polygonal key DApp with 161,040 active users.

The above data may explain why the avalanche was in troubled waters and the AVAX price fell by 45% in 30 days. Investors are skeptical of $ 14.80 support until network usage metrics improve, especially the number of active addresses in decentralized finance (DeFi).

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