Avalanche, currently the 14th-largest cryptocurrency, is experiencing a significant downturn, influenced by weak on-chain metrics and declining staking yields.

Avalanche Active Addresses Decline

Avalanche (AVAX) is trading at $23.8, a substantial drop of over 63% from its peak in March. The market cap has decreased from over $22 billion in March to $9.57 billion.

This downward trend can be attributed to weaker on-chain metrics. Data indicates that the number of active addresses in the Avalanche ecosystem has dropped to 43,208, a significant decline from over 91,000 in March and an all-time high of over 555,000 in April 2023.

Additionally, the number of transactions and gas fees on the network has been declining. On September 10, the network handled 155,000 transactions, a stark contrast to over 600,000 in March. Gas fees have decreased to less than $20,000, compared to a year-to-date high of over $300,000.

Falling Staking Yields

Data shows that AVAX’s staking yield has reached a low of 7.9%, the lowest level since November of last year. This decline is concurrent with a reduction in the amount of AVAX staked in the network.

In the past 30 days, over 21 million tokens, valued at over $494 million, have exited the network, with a significant portion of these outflows occurring on September 11.

Competitive Pressure from Other Networks

Avalanche’s market share in the cryptocurrency industry has been diminishing as users migrate to other layer 1 networks like Solana and Tron, and layer-2 platforms such as Arbitrum and Base.

For instance, Base, launched in 2023, has accumulated over 1.6 million active addresses, with transaction volumes reaching record highs. Base decentralized exchanges (DEXes) handled transactions worth $3.4 billion in the last seven days, whereas Avalanche’s volume was over $554 million. Base’s DeFi Total Value Locked (TVL) stands at over $1.4 billion, compared to Avalanche’s $923 million.

Avalanche Price Trends and Risks

Avalanche is at risk of further price declines. The cryptocurrency formed a death cross pattern in June, where the 200-day and 50-day moving averages made a bearish crossover.

Since then, AVAX has continued to form a series of lower lows and lower highs, remaining below the 50-day moving average and the 61.8% retracement point. The bearish trend is expected to continue as long as it stays below the 200-day moving average.

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