Algorand’s ALGO token value has plunged to new lows following the crypto market’s epic crash on Aug. 17.
In response to CryptoSlate’s knowledge, the digital asset fell to an all-time low of $0.08846 final Thursday. Whereas its worth has since rebounded to $0.09673 as of press time, market sentiments surrounding the asset stay damaging.
Why is ALGO worth dropping
Earlier within the 12 months, the SEC labeled the ALGO token as a safety as a part of its costs towards the U.S.-based crypto alternate Bittrex. This classification has important implications for the monetary laws that the token and its holders face.
Regardless of sturdy opposition from its Basis, ALGO has seen a decline in demand on account of investor hesitation round property with out clear regulatory standing. This has resulted within the token’s worth dropping by greater than 87% because the classification.
Earlier than the SEC classification, Algorand’s ecosystem confronted challenges when MyAlgo, a distinguished pockets within the ecosystem, was hacked in March. The incident resulted in losses of over $10 million, shaking confidence within the community’s safety measures.
Regardless of the falling worth of ALGO, Algorand Basis CEO Staci Warden stays optimistic, believing that the community’s capability to proceed attracting builders is a constructive signal for its future.
DeFi exercise stalls
In the meantime, the value decline is amid a falling DeFi exercise on the community. Information from DeFillama exhibits that the whole worth of property locked on the blockchain has fallen to lower than $50 million after peaking at greater than $200 million in February.
Curiously, the drop in TVL is just not merely a results of ALGO’s falling costs. In July, Algorand’s largest decentralized finance protocol, Algofi, mentioned it will wound down its operations on account of its incapacity to keep up the platform. At its peak, the DeFi platform contributed over 50% of Algorand’s DeFi exercise.
Algofi’s sudden closure severely impacted confidence in different protocols, which had been nonetheless striving to draw new customers to their platforms.
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