Avalanche Bridge to Ethereum records 70% drop in value transfers, concern for AVAX price?

Funds flowing through Avalanche Bridge have dropped by 70% in the last 24 hours, DeFiLlama statistics Shows on 31 May.

70% drop in activity in Ethereum from Avalanche Bridge

Over the past day, Bridge has facilitated transactions worth $2,634,828 and processed transfers of $22.4 million in the past week.

Bridge has processed 278 transactions over the past day, totaling approximately $2.6 million. This shows a sharp decrease in activity between Ethereum and Avalanche, one of the world’s largest smart contract platforms.

Avalanche Bridge connects Avalanche’s c-chain, one of three interoperable blockchains that define the low-finality platform, with Ethereum.

Since C-Chain is compatible with the Ethereum Virtual Machine (EVM), assets can be easily transferred from Avalanche to Ethereum and vice versa.

The compatibility with EVMs coupled with the decentralization of the bridge means that users can securely transfer funds between the two blockchains.

Avalanche, unlike Ethereum, is explicitly designed for decentralized finance (DeFi) dApps. It has high processing speed, relatively low fees, and is decentralized. However, it lags behind Ethereum in activity, when looking at Total Value Locked (TVL).

According to DeFiLlama data, out of approximately $48 billion of all DeFi TVL, more than $26.5 billion is managed by dapps on Ethereum.

More assets moved between Avalanche and Bitcoin

Notably, while there is a worrying contraction in the number and value of transactions between Avalanche and Ethereum, Avalanche is the core bitcoin bridge. flourishing,

On 31 May, there was a significant increase in transfers and value, with an increase of 2,726%. Within 24 hours, over $6.5 million in assets were transferred through the bridge. This is almost half of the average weekly transfer which stands at $13.81.

Bitcoins transferred from the Bitcoin network to Avalanche C-Chain are tokenized and conform to the ERC-20 standard. In that case, it can be moved to Ethereum and used to participate in DeFi.

Scanning activity from Avalanche to bitcoin and ethereum, the disparity may suggest that more users are moving their assets away from bitcoin.

However, no discernible fundamental event can explain why more users are migrating coins from bitcoin and fewer are engaging with ethereum.

Bitcoin, Ethereum, and Avalanche price have been under pressure over the past 24-hours, declining from recent highs. For example, AVAX is down 6% from its May 28 high, extending losses since mid-April. AVAX is down 35% in the past six weeks and is at its March 2023 low.

If sellers double down, AVAX could slide below a key multi-week support level. In that case, it could drop to a December 2022 low of around $10.

Feature image from Canva, chart from TradingView