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.
Avalanche (AVAX) 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.
Similar drops were seen in algorand (ALGO) and cosmos (ATOM), which fell to $1.32 and $21.37, respectively.
The declines follow months of gains for tokens of the layer 1 blockchains, colloquially billed as ‘Ethereum rivals.’ Layer 1s are different blockchains that may have a different consensus mechanism than Ethereum and are generally cheaper and faster to transact on.
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 show.
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 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 DeFiLlama 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 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.