Connect with us

Cryptocurrency

Avalanche (AVAX) price drops 45% in a month and data points to further downside

Published

on


Avalanche (AVAX) is down 45% in 30 days and in the same time the cryptocurrencies’ total market capitalization shrank by 29%.

Despite the recent downturn, this decentralized application (DApp) platform remains a top contender in the layer1 and layer2 race and it ranks high in terms of smart contract deposits and active addresses. Yet, the lackluster token price is still causing investors to rethink whether the network remains a “serious” competitor.

AVAX token/USD at FTX. Source: TradingView

The brutal sell-off on risk assets caused AVAX to test the $14.80 support multiple times, while the current market capitalization stands at $4.8 billion. It’s important to also note that the network’s total value locked (TVL) holds an impressive $3.2 billion.

As a comparison, Solana (SOL) offers incredibly low network fees and holds a $2.1 billion TVL. Yet, SOL token’s market cap stands at $12.9 billion, which is almost 3 times larger than Avalanche’s valuation at the $14.8 price level.

The TVL indicator is extremely relevant because it measures the deposits on the network’s smart contracts. If we use Polygon (MATIC), an Ethereum layer-2 solution, as a proxy, the network holds a $1.8 billion TVL while the token’s market capitalization stands at $3.5 billion.

In short, Avalanche looks heavily discounted considering how similar networks’ market capitalization vastly exceed their respective TVL.

Total value locked increased, but the number of users declined

Avalanche’s primary decentralized application metric strengthened in the last 60 days as the network’s TVL jumped to 184 million AVAX tokens. This suggests that even as AVAX price crashed, investors did not withdraw tokens from its decentralized applications.

Avalanche network total value locked, AVAX. Source: DefiLlama

In terms of AVAX tokens, the network’s TVL has effectively grown by 35% in two months. As a comparison, Ethereum’s TVL increased by 10% in Ether terms, while BNB Chain faced a 14% reduction in the same period.

To confirm whether the TVL increase in Avalanche is encouraging, traders should analyze DApp usage metrics. Some applications, such as games and marketplaces, do not require large deposits, so the metric is irrelevant in those cases.

Avalanche DApps 30-day data. Source: DappRadar

As shown by DappRadar, on June 21, the number of Avalanche network addresses interacting with decentralized applications declined by 42% versus the previous month. In comparison, the BNB Chain faced a 16% user decrease, while Polygon declined by 29%.

Price follows fundamentals, which have gone down

Even though Avalanche’s TVL has outperformed competing Dapp networks, the decrease in network use is concerning. For instance, Trader Joe’s 93,130 active addresses are smaller than Polygon’s leading DeFi application, QuickSwap, which holds 161,040 active users.

The above data suggest Avalanche is in troubled waters and might explain why the AVAX price plunged 45% in 30 days. Investors will likely remain skeptical of the $14.80 support until the network usage metrics improve, especially the number of active addresses in DeFi.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published.

Cryptocurrency

ANZ’s stablecoin used to buy tokenized carbon credits

Published

on



ANZ’s stablecoin A$DC has been used to buy Australian tokenized carbon credits, marking another critical test of the asset’s use cases in the local economy.

In March, the “Big Four” bank became the first major Australian financial institution to mint its own stablecoin after overseeing a pilot transaction worth 30 million AUD ($20.76 million) between Victor Smorgon Group and digital asset manager Zerocap.

ANZ’s stablecoin is fully collateralized by Australian dollars (AUD) held in the bank’s managed reserved account. So far, A$DC transactions have primarily been conducted over the Ethereum blockchain.

According to a June 27 report from the Australian Financial Review (AFR), the latest transaction saw its long-time institutional partner Victor Smorgon use A$DC to purchase Australian Carbon Credit Units (ACCUs).

The carbon credits were tokenized and provided by BetaCarbon, a blockchain-based carbon trading platform that issues digital security assets dubbed “BCAUs,” which represent one kilogram of carbon offsets per credit.

The transaction also saw participation from Zerocap again, who provided market-making services and liquidity by exchanging the A$DC sent from Victor Smorgon into USD Coin (USDC) so that BetaCarbon could accept the deal. The value of the transaction has not been specified, however.

In terms of the bank’s outlook on the crypto/blockchain sector, ANZ’s banking services portfolio lead Nigel Dobson told the AFR that the firm is looking at blockchain tech as a means of “pursuing the transition of financial market infrastructure” and is not necessarily interested in speculative crypto assets themselves.

“We see this is evolving from being internet-protocol based to one of ‘tokenized’ protocols. We think the underlying infrastructure – efficient, secure, public blockchains – will facilitate transactions, both ones we understand today and new ones that will be more efficient.”

Dobson echoed similar sentiments at the Chainalysis Links event in Sydney on June 21, noting that ANZ promptly “banned the word crypto immediately in all of our internal communications and narrative” when it started exploring blockchain tech a few years ago.

He went on to add that the bank has explored multiple use cases for blockchain tech, such as supply chain tracking and providing on-ramps via stablecoins for institutions to invest in digital assets. However, Dobson suggested that tokenized carbon credits were a key area that the bank has been gearing up for:

“Another area where we have a strong position in terms of sustainability is where we feel the tokenization of carbon credits and marketplaces driven by tokenized assets and tokenized value exchange will be really efficient.”

Related: BTC Markets becomes first Australian crypto firm to get a financial services license

At the start of this month, ANZ ruled out offering any crypto exposure to retail investors due to their lack of financial literacy.

Maile Carnegie, an executive for retail banking, noted at the Australian Financial Review Banking Summit that “the vast majority of them don’t understand really basic financial well-being concepts.”