Avalanche price dived sharply this week as concerns about the network’s decentralized finance (DeFi) ecosystem continued. AVAX also crashed hard in line with the ongoing crypto sell-off. It dropped to a low of $29.87, about 54% below the highest point this year.
Avalanche DeFi woes
Most blockchains have lost substantial assets in their DeFi ecosystem during the ongoing crypto sell-off. Data by DeFi Llama shows that Avalanche now has over $1 billion in Total Value Locked (TVL).
A closer look shows that the assets plunged by over 50% in the past 24 hours. Most of this decline happened in Benqi and Trader Joe, the two biggest players in the ecosystem. Benqi lost 31% of assets, bringing its TVL to $332 million.
Similarly, Trader Joe lost over 76% of its assets in the past 24 hours, giving it a TVL of over $174.5 million. Trader Joe is a leading decentralized exchange (DEX) in Avalanche’s ecosystem while Benqi is a lending and a liquid staking platform.
Stargate was the only good news in the ecosystem as it continued adding assets. Its total assets have jumped by over 20% in the past 24 hours to $35 million.
Avalanche price is also going through jitters as the price and demand for Coq Inu retreats. Coq Inu, the biggest meme coin in Avalanche’s ecosystem, has crashed by over 60% from its highest point this year as many holders have dumped iy.
There are other reasons why the AVAX token price has retreated in the past few weeks. First, the crash is in line with the performance of Bitcoin and other altcoins. Bitcoin has already retreated from over $73,000 to below $65,000. In most cases, altcoins tend to drop deeper than Bitcoin during major sell-offs. Bitcoin has sold off as investors sell the halving news.
Second, there are jitters about the Federal Reserve, which has led to a big jump in the US dollar and VIX indices. Investors have changed their outlook about when the first rate cut will happen. Most of them believe that this will happen in September if inflation continues falling.
Avalanche price forecast
The daily chart shows that the AVAX price peaked at $65.38 in March this year. It has now crashed hard below the important support level at $50, its highest swing in December last year. The token has crashed below the Ichimoku cloud indicator.
Avalanche has moved below the 50-day and 100-day Exponential Moving Averages (EMA). The two indicators are nearing a bearish crossover pattern. At the same time, the Relative Strength Index (RSI) has moved from the overbought point of 76.35 to about 32.
AVAX price has also formed a bearish pennant pattern. Therefore, the outlook for the token is extremely bearish, with the next point to watch being at $25, which is about 27% below the current level.
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