After experiencing an uptrend in the month leading up to August 13, Avalanche (AVAX) faces a 16% correction, breaking its impressive 73% rally.
Some analysts see the correction as “technical adjustments”, pinpointing technical factors working against the AVAX price. But others see a display of weakness according to the metrics reflecting the network’s Total Value Locked (TVL), deposits and Decentralised Applications (dApp) usage.
To date, the price of Avalanche remains 83% below its November 2021 all-time high at $134.53, while its 24 hour trading volume was only 15% that of November 2021. Avalanche still remains as one of the top-15 contenders with a market capitalization of $7.156Bn. Its close competitor, Solana, holds almost twice its market cap with 14.27B at the time of writing.
Avalanche began displaying weakness in late July when its TVL first dropped below 110 million AVAX on 19 July, 2022. Its current 87.41 million is a sharp 40% cut and signals that investors might be losing confidence and withdrawing coins from the network’s smart contract applications.
Avalanche’s TVL has been hit the hardest compared to similar smart contract platforms. In the same period, Solana’s network TVL reduced by 27% in SOL and Ethereum’s TVL decreased by 33% in ETH.
Some analysts seem to underline the importance of the TVL metric, seeing it as an important indicator for the decentralised finance (DeFi) industry. It is essential to note that the metric is less relevant for Non-Fungible Token (NFT) mining, digital item marketplaces, crypto games, gambling and social applications.
Hubble Exchange has recently launched a native perpetual futures exchange on Avalanche, allowing traders to collateralise multiple tokens to trade perpetual futures contracts, giving traders the ability to maintain exposure to digital assets while using them as collateral to trade perpetuals.
Avalanche is a blockchain platform that runs on a Proof-of-Stake consensus mechanism that aims to address the blockchain trilemma of scalability, security and decentralisation. Avalanche supports smart contracts to run dApps on its network. AVAX is the native token of Avalanche.
