Avalanche Price News: Odds of a 50% Drop for AVAX Are Higher Than Ever

[00:00:00]So, Avalanche has dropped sharply in the past 3 days. Today is dropping by 11.3%.

[00:00:08]Uh 2 days ago, it dropped by 24% and year-to-date it has booked a 50% loss. Uh I think we have already crossed that mark, actually. And um what what is more important, uh the price action just broke below a long-dated demand zone support area at $9 for a token from which AVAX had bounced uh strongly in the past and this tells something about um the market's current attitude.

[00:00:40]Uh we have several microeconomic headwinds uh that are affecting the public's interest and in cryptocurrencies and altcoins um have to demonstrate that they are worthy of people's capital, you know, and right now that's not what we're seeing.

[00:00:58]Uh we're actually seeing a flight to quality within the market. Um investors are focusing on projects that have real-world use cases that have managed to um even though we are in a strong bear market.

[00:01:13]Uh the projects that have managed to keep attracting developers, creating apps that are useful to somebody and and investors are still using the network.

[00:01:23]But what we're seeing in Avalanche is something uh completely different and we can we could qualify this project. Uh and not many people within the crypto industry like this term, but I think it's pretty suitable for this kind of cases. Um Uh I we could this project qualifies as a zombie chain for many reasons, you know, if you look at on-chain data, which is something that I like to do when I'm analyzing individual projects, particularly within the altcoin space, uh you can see that the trend for this particular blockchain is not good, you know. Chain fees have been dropping steadily since 2023.

[00:02:02]Uh network usage has diminished, you know, and the project is collecting less money and and less money it means that the the project's uh foundation and and those in charge of promoting adoption has have less resources to invest.

[00:02:20]Uh last year, for example, uh this project just collected 8 million in in chain fees total a year. Uh now if you compare that with 2023, that's actually kind of like an 80% drop. Now this year, Avalanche is uh going to be lucky if it collects 2 million from um chain fees and and that's not good because if you see the market cap of this project is kind of like 2.6 billion. So, that gives us a price to revenue metric of around 1,300%.

[00:02:55]And that's pretty bad, you know, that's just way too overvalued even for a blockchain uh project. Now you compare that to Solana, for example, and the metric for that project, which is a much more stra- established, you know, it has more developers, it has apps that are pretty popular like pump.fun, and and and also, you know, it has an entire ecosystem of DeFi apps, and it has been it has been used by the president of the United States to launch his meme coin.

[00:03:27]Uh you know, Solana has a a much lower valuation in terms of price to revenue, even though it it it's uh chain fees have been declining as well, and the price to revenue is much lower. So, that creates significant room for a strong drop in the price of AVAX as the market corrects this kind of overvaluation across the crypto space. Now, um we could see this project declining, uh, this token in particular declining from $6 uh, from this $6 threshold to $3, and that means a 50% downside risk. That is what we are seeing right now. That is what we anticipate it could happen. It it it's realistic because we are in a macro back backdrop. There's just unfavorable for risky assets, and altcoins are just now, you know, as risky as it gets. And in this particular environment, we may see AVAX dropping significantly over the next few weeks, and could retest this $3 level, um, if the market continues, uh, market sentiment continues to be heavily depressed. Uh, you can see, for example, that uh, analysts and investors are now expecting a rate hike this year.

[00:04:45]Interest rates are expected to increase.

[00:04:48]That's that is unfavorable to risky assets, and uh, projects like this that we could qualify as zombie chains, uh, are probably going to take a big hit in their valuations. And if if, uh, Avalanche drops to $3, that's going to push its valuation to around 1.3 billion. And if we divide that into 2 million, that's a still way off, um, valuation metric. So, the crypto space is just going through a massive shift in terms of, uh, what investors put money into. And I think it Avalanche has just not been able to prove that it can, uh, deliver something more than a working blockchain, which is good, you know, but it's not necessarily something that is worth 2.6 billion. So, um, brace, uh, you know, fasten your seat belts because this could be a wild ride to that $3 demand zone, uh and and maybe even lower, depending on how the market views uh that valuation versus uh what the project what the ecosystem is actually telling us.

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