AVAX has seen a decline of 11% in the last week, adding to its underwhelming performance at the beginning of the year. The momentum that drove it to reach an 18-month peak of $48 is now fading away.
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Despite this, its on-chain metrics have shown significant improvement, with a surge in daily active addresses and transactions. This could be due to the increasing demand for more affordable alternatives to Ethereum.
In mid-January of the previous year, Avalanche experienced a significant increase in value, rising from $15.8 to a record high of $48 in December. However, it has had a weak start to the current year and has recently seen a decrease of over 10%, indicating a decline in its upward momentum. The question remains whether AVAX can turn around this trend and emerge as one of the hidden gems of the year.
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At the time of writing, AVAX is currently trading at $35.06, experiencing a decline of 2.8% in the last 24 hours and 11.30% in the last week. Although there was an initial increase from $33 to $41 earlier in the week, the bears have since taken over and the price has been steadily decreasing.
In December, the token saw a surge in investor attention as its trading volume consistently surpassed $1.5 billion. However, with the recent decrease in price, the volume has also dropped, with the past 24 hours recording a volume of $487 million, almost 10% lower than the previous day. Despite this, Avalanche still holds a spot in the top 10 cryptocurrencies with a market value of $12.8 billion, slightly ahead of Dogecoin.
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Despite the decrease in price and volume, the on-chain fundamentals continue to show strength. Throughout the year, there has been an increase in both daily active addresses and transactions.
Additional signs do not suggest the same level of positivity. The relative strength index has decreased from 72.13, indicating that the asset is overvalued, to 45, slightly above a weak level, indicating that investors are losing their enthusiasm for the project. This is further reinforced by the token's open interest, which has only increased by 1.2% to $246 million.
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The current value locked indicates that the project is facing difficulties in returning to its previous success. With a current value of $859 million, Avalanche's TVL is only a fraction of its record high of $11.4 billion.
According to Santiment's data, investors on social media have shown a decline in weighted sentiment in recent days, indicating a bearish outlook.
The Future of Avalanche (AVAX)
Despite being a major beneficiary during the bullish market of the previous year, Avalanche is strategically positioning itself for sustained growth rather than quick speculation and hype.
The network of Avalanche is known for its high scalability and has frequently been dubbed as a potential competitor to Ethereum (although according to Solana founder Anatoly Yakovenko, this label undermines both Ethereum and any other project utilizing it). It operates through specialized sidechains that enable simultaneous growth, similar to how Cosmos or Polkadot's parachains function.
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An important progression in modern times has been the emergence of ASC-20, a variation of the BRC-20 standard on the network which implemented Bitcoin Ordinals on BTC. Since their introduction in June of last year, the network has documented over 100 million inscriptions, indicating the immense and underutilized market for NFTs on different chains.
Aside from NFTs, ASC-20 engravings have the potential to accommodate any type of token, including stablecoins and tangible assets.
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