Avalanche [AVAX] fell victim to a hack that caused losses worth millions of dollars. This definitely had a negative impact on AVAX’s price action, as the token’s bull rally came to an end.
Avalanche’s Stars Arena is under attack
Stars Arena, which is a newly launched SocialFi app on the Avalanche blockchain, witnessed a major security breach on 7 October. The hack resulted in a loss of nearly $3 million.
Several officials also took to X (formerly Twitter) to reveal more details about the hack. For instance, Emin Siren, founder and DEO of Ava Labs, mentioned in a tweet that $3 million was a huge sum of money to lose.
However, he also mentioned that the Stars Arena team could easily raise the money to plug the hole given its revenue stream and growth trajectory.
How is AVAX reacting?
The hack definitely made AVAX a topic of discussion in the crypto space of late, which was evident from the rise in its social engagement in the last 24 hours. However, bearish sentiment around the token surged by 64% while its AltRank plummeted.
It was surprising to see that while negative sentiments were propelled by the hack, network activity surged. As per Artemis’ data, AVAX’s daily adjective addresses and transactions spiked in the last few days, suggesting high network activity and usage.
Though the blockchain’s network activity remained high, the same can’t be said for AVAX’s price action. The token witnessed a comfortable rally last week as its price surged by 12%. But the good days came to an end, thanks to the hike in bearish sentiment.
According to CoinMarketCap, AVAX’s price dropped by nearly 4% in the last 24 hours alone. At the time of writing, AVAX was trading at $10.52 with a market capitalization of more than $3.7 billion.
This was accompanied by an increase in trading volume, suggesting that investors were selling their assets.
After a massive spike, AVAX’s 1-week price volatility also dropped slightly. It was interesting to note that while AVAX’s price showed high volatility, its development activity increased.
Investors should worry more, as a look at AVAX’s derivatives market suggested that the token’s price could plummet further. For instance, its Funding Rate went green, meaning that Futures buyers were purchasing the token at its lower price.
AVAX’s Open Interest also registered an uptick while its price fell, further increasing the chances of a continued downtrend.