As of the latest update, Avalanche [AVAX] is currently trading at levels similar to those seen in November. The considerable gains AVAX experienced during Bitcoin’s [BTC] surge from $68k to $106k have now been erased. Interestingly, Bitcoin has managed to maintain most of its gains during this period.
Essentially, this situation has shed light on the vulnerabilities of this altcoin in terms of price performance.
It is worth noting, however, that there has been a noticeable increase in ecosystem development activities over the past six months, despite the relatively weak price movement.
In a recent post by Santiment Insights, a user named Brian highlighted some of the leading protocols in the cryptocurrency sphere that have witnessed a surge in development activities.
Among them, Avalanche stood out with a 10% rise in activity over the past six months – a promising development. CryptoCrypto delved deeper into various metrics to help determine whether investors should feel optimistic or cautious.
Declining Active Addresses and Network Expansion as Signals of Concern
The total value locked (TVL) peaked at $1.65 billion in mid-December but has since dropped to $1.28 billion as of now.
Transaction volumes also hit highs in January, with 500k transactions per day being common. However, that figure has now decreased to around 350k.
Of more concern is the sharp decline in active addresses and new addresses in early February, almost completely negating the previous surge.
The movement of zero balance addresses mirrored the trends in active addresses of the network. In the past week alone, new addresses decreased by 95% and active addresses by 84%, indicating a lack of market confidence.
Analyst Ali Martinez used the price chart to emphasize the significance of the $26 level using the in/out of the money metric. It is crucial for investors to note that this chart is based on price, making $26 a critical local demand area.
Furthermore, the daily price chart underscores the current bearish trend, with prices revisiting November lows. The decrease in active addresses and network expansion hints at weakened demand, potentially making a swift recovery less likely for Avalanche [AVAX].