Network activity on Avalanche is slowing after growth in April. Liquidity Exit Pushes AVAX Price Down.
Network activity on Avalanche [AVAX] has dropped significantly over the past month as the number of daily active addresses and transactions on the Layer 1 (L1) blockchain decreases.
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This decline came after the network included a spate of active wallets in April following an aggressive deployment of a number of Avalanche subnets.
According to data from Artemis, the number of unique wallet addresses sending daily on-chain transactions on Avalanche has steadily decreased since June 14. At a daily active address count of 90,500 on July 8, it’s down 33% since then.
Due to a decrease in active addresses, the number of completed transactions on Avalanche has also decreased. However, the drop in the number of daily transactions on the chain dates back to May 20. According to data from Artemis, daily transactions on Avalanche have decreased by 52% since then.
In addition to a sharp drop in network activity, DeFi on the chain has also taken a beating. Since the start of the second quarter, the total number of transactions completed through on-chain decentralized exchanges (DEXs) within Avalanche has declined.
This resulted in a corresponding drop in network TVL over the same period. At $686.53 million, Avalanche’s TVL is down 25% since April. Per data from Defillamathe chain’s TVL has dropped 10% this year alone.
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AVAX is trading lower
At the time of writing, AVAX was exchanging hands for $13.35 per token. Dates from CoinMarketCap revealed that AVAX rallied to a high of $14.12 on July 9 in the past week before embarking on a downtrend.
A look at price movements on a daily chart revealed that the week could potentially see further declines in the value of AVAX. For example, a review of AVAX’s Bollinger Bands indicator revealed the alt’s price trading through the upper band. In such situations, the asset is considered to have reached an overbought state. Traders and analysts often interpret this as a potential signal of a price reversal or a period of consolidation.
Moreso, AVAX’s Chaikin Money Flow posted a negative reading of -0.04 at the time of going to press. This indicated that AVAX distribution was outpacing accumulation and the liquidity needed to increase the value of the asset was being removed by traders.
Finally, the Directional Movement Index suggested that sellers were getting ready to overwhelm the market. The negative directional index (red) was in an uptrend, poised to rest above the positive directional index (green).
This post Avalanche: what you need to know about AVAX as network activity craters
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