AVAX Price Plunges: Is Recovery Likely?

Avalanche (AVAX) Price Plummets to November Lows

Avalanche (AVAX) has retraced all its gains from November, falling back to its previous lows. This decline occurred despite Bitcoin (BTC) retaining most of its gains from its recent surge. This highlights AVAX's price chart weakness relative to BTC. The strong gains seen when BTC rose from $68,000 to $106,000 have completely evaporated.

Source: AVAX/USDT on TradingView

Ecosystem Development Activity: A Positive Counterpoint?

Despite the bearish price action, ecosystem development activity has increased over the last six months. This suggests underlying strength, even though price hasn't reflected it. A Santiment Insights report showed a 10% increase in Avalanche development activity during this period.

Source: Santiment

Warning Signs: Network Activity Slump

However, other metrics paint a more concerning picture. The Total Value Locked (TVL) has fallen from a peak of $1.65 billion in mid-December to $1.28 billion. Daily transactions have also dropped from 500,000 in January to around 350,000 currently. Furthermore, a significant surge in active and new addresses in early February has nearly vanished, indicating waning market confidence.

Source: DefiLlama

Source: IntoTheBlock

Over the past week, new addresses dropped by 95% and active addresses by 84%.

Source: Ali Martinez on X

Expert Analysis and Outlook

Crypto analyst Ali Martinez highlighted the importance of the $26 level as a potential demand zone. However, given the current strongly bearish trend and the decline in network activity, a quick recovery seems unlikely.

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