AVAX Prices Slightly Down Amidst Increased On-Chain Activity
Increase in Avalanche [AVAX] Usage by 221% - Three Elements to Determine if $25 Stands Firm
Hey there! Let's chat about Avalanche (AVAX) and its recent price drop of 1.13%, landing at $23.66. Here's what's going down.
Despite positive signs of bullish sentiment, active sellers are still hanging around the market, causing an increase in liquidity outflow.
On-chain Surge but Liquidity Issues Persist
Over the past 24 hours, Avalanche has experienced a significant surge in activity. Nansen reports a 221% increase in Active Addresses, and a 109% rise in Transaction Count. So more investors are jumping in, and it seems they're making moves.
But hold on! Interestingly, 89.94% of these transactions were tied to the NFT marketplace, OpenSea. This aligns with the strong growth in NFT applications, which is the second-best performing sector in the last 30 days, with a 78.1% boost.
However, despite the increased on-chain activity, AVAX still suffers from liquidity outflow. DeFiLlama states that the total value locked (TVL) has dropped by 3.26%, from $1.519 billion to $1.469 billion. This decline equates to $50 million worth of AVAX being sold.
As if that wasn't enough, the DEX Trading Volume has also fallen from $216.5 million to $130.3 million, showing waning demand on decentralized exchanges. To sustain upward momentum, AVAX requires demand to bounce back, not just on-chain but across trading and liquidity channels too.
Now, if you're scratching your head, thinking that it's all a cryptic puzzle, let me break it down. In this scenario, the increased on-chain activity doesn't seem to be translating into positive price action due to persisting liquidity issues and a decline in trading activity.
[Sources]
- Nansen
- CryptoQuant
- TradingView
- DeFiLlama
Important Factors Affecting AVAX:
- Increased On-chain Activity: A rise in Active Addresses and Transaction Count implies more investors have joined Avalanche, and a significant number of them have completed transactions.
- Market Sentiment: Despite bullish community sentiment, reduced trading volume can impact liquidity.
- Liquidity Dynamics: Apart from increased on-chain activity, broader market conditions, stablecoin movements, and competition with other platforms can influence liquidity dynamics.
- NFT Applications: The growth in NFT applications could contribute to driving AVAX's price up in the near future.
By staying updated on these key factors, you'll stay ahead of the game in the ever-evolving cryptocurrency market.
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- The increase in NFT transactions on Avalanche's OpenSea marketplace, aligned with the strong growth in NFT applications, indicates a possible future price rise for AVAX tokens.
- Interestingly, despite a significant surge in on-chain activity, AVAX is still grappling with liquidity outflow, as reported by DeFiLlama, which has led to a decline in TVL and DEX trading volume.
- More transactions on decentralized exchanges using crypto tokens, such as Ethereum (ETH) or other cryptocurrencies, may help improve AVAX's demand and stabilize its price in the face of ongoing liquidity issues.
- To better understand and predict the price movements of AVAX, it's essential to consider potential developments in DeFi, as well as the ongoing growth of blockchain technology and nascent sectors such as Non-Fungible Tokens (NFTs).
