As of the latest data, Avalanche [AVAX] has fallen back to its price levels seen in November. The previous significant gains made by AVAX during Bitcoin’s [BTC] surge from $68k to $106k have now been erased, despite BTC maintaining most of its gains.
This situation clearly indicates the weakness of the altcoin in terms of price performance.
However, it’s worth noting that activities related to ecosystem development have shown an uptrend over the past six months, despite the relatively weak price movement.
In a recent Santiment Insights post, a user named Brian highlighted some of the top protocols in the crypto space that have witnessed a surge in development activity.
Among these, Avalanche stood out with a 10% increase in activity over the last six months, which is indeed a positive development. CryptoCrypto delved deeper into various metrics to assess whether investors should feel optimistic or exercise caution.
Warning Signs: Decline in Active Addresses and Network Growth
The total value locked (TVL) reached a peak of $1.65 billion in mid-December but has since dropped to $1.28 billion at present.
Transaction volumes also peaked in January, with daily transactions averaging around 500k. However, the current number hovers closer to 350k.
More concerning is the sharp decline in active addresses and new addresses observed in the initial week of February, almost completely reversing the earlier trend.
The movement of zero balance addresses mirrored the activity of active addresses in the network. In the last week alone, new addresses plummeted by 95% and active addresses by 84%, indicating a lack of market confidence.
Analyst Ali Martinez used the price chart’s in/out of the money concept to highlight the significance of the $26 level, a crucial support zone based on price data.
With the current strong bearish trend shown in the daily price chart, where AVAX is revisiting its November lows, the diminishing active addresses and network growth signal a weakened demand. This suggests that a rapid recovery for Avalanche [AVAX] may be unlikely in the near term.