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Avalanche, Cosmos Lead Crypto Losses Amid Altcoin Purge
Crypto markets were bathed in red on Tuesday as weakening technical signals and macroeconomic factors came into play.
Updated May 11, 2023, 6:44 p.m. Published Dec 14, 2021, 9:37 a.m.
Tokens of the Avalanche, Algorand and Cosmos blockchains were among some of the biggest losers early Tuesday as the crypto market took a hit. The moves came as stocks fell in Asia amid a move to less risky assets.
slid as much as 11% to a support level of $77 at press time, part of a broader downtrend from the high $130s, and an almost 50% reduction from the token’s highs.
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Similar drops were seen in and , which fell to $1.32 and $21.37, respectively.
The declines follow months of gains for tokens of the base (layer 1) blockchains, colloquially billed as “Ethereum rivals.” Layer 1s are blockchains that may have a different consensus mechanism than Ethereum and are generally cheaper and faster for conducting transactions.
Tokens of such platforms have seen a huge rise in the past months. ATOM traded at $9 in June and peaked at $43 in September. ALGO surged from $0.74 to $2.38 in the same period, data from CoinGecko shows.
AVAX, which was changing hands at $11 in June, hit a peak of $134 in November. Development on the platform rose alongside the prices, with projects like reserve-backed currency platform Wonderland and interest-bearing collateral provider Abracadabra locking up billions of dollars worth of tokens.
Value locked by decentralized finance (DeFi) projects – protocols using smart contracts to create financial services like lending and trading for users – on Avalanche rose to a staggering $13 billion last week from as little as $3.6 million in February, data on tracking tool DeFi Llama shows.
Despite the strong fundamentals, some say investors are seeking less-risky investments as the broader market takes a tumble.
“The current macro de-risking attitude from traditional finance investors has also affected the broader crypto market, meaning that the most common names will see an obvious decrease in pricing,” James Wo, founder of crypto investment fund Digital Finance Group, said in a Telegram message.
A weak bitcoin price action preceded declines in the broader crypto market. Tokens of Ethereum layer 2 (companion system) project Polygon fell 10%, those of parachain platform Polkadot fell 9%, and metaverse tokens like GALA and SAND fell 11% each, data from CoinGecko show.
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