99.5% Of AVAX Holders Are At Loss. Why Is Avalanche Price Keep Going Down?

IntoTheBlock on X: "The number of $AVAX holders in profit has reached an all-time low. While the asset has witnessed similar levels before, such as in June & December of 2022, it is the first time that nearly all AVAX holders (99.5%) are holding at a loss. 

The price of AVAX tokens have reached a new low. On August 23, 2023, AVAX is trading at $10.12. IntotheBlock reported that 99.5% of AVAX holders are at loss now.

What is Avalanche?

Avalanche is a layer 1 and a smart contract cryptocurrency. It is 20^th largest crypto by market cap with market cap of $3.482 billion. Avalanche’s fully diluted market is $7.286 billion. AVAX is deflationary token. It has a max supply of 720 million AVAX. Avalanche has $529 million total value locked.

Avalanche can process 4,500 transactions per second. It has time to finality of 2 seconds. It is an EVM compatible blockchain like Polygon.

Why Avalanche price goes down?

Avalanche is facing fierce competition from layer 2 blockchains such as Arbitrum, Optimism, and Base. Layer 2 scaling solutions provide cheap and fast transactions like Avalanche. Layer 2’s advantage is users can bridge their tokens to Ethereum mainnet.

Lending and borrowing platforms on Avalanche are Aave and Trader Joe. Trader Joe Lend has a TVL of $6.34 million and $182 million TVL on Aave. Avalanche is grower slower than Layer 2.

Second, Avalanche is also facing a competition from Polygon. Polygon is similar to Avalanche, it is EVM compatible. Polygon has $263 million TVL on Aave.

The last reason is crypto winter. Cryptocurrency market is currently performing poorly. Money is not coming into the crypto economy that it needs to create more demand in the use of blockchain and to create speculation.