Avalanche (AVAX) TVL and Stablecoin Market Cap Recovery: What Does It Mean for AVAX Price?

The Avalanche [AVAX] ecosystem has been experiencing a resurgence of activity as the market enters recovery mode. On-chain data revealed significant changes

The Avalanche [AVAX] network has seen a resurgence in activity as the market recovers. On-chain data showed some interesting shifts in some of Avalanche’s metrics, particularly the total value locked (TVL).

Avalanche’s TVL is a long way off from its historic high. It peaked at $11.49 billion in December 2021, but the network saw heavy outflows during the crypto winter.

The TVL fell to below $500 million in September last year and only managed to push back above $1 billion this week.

According to data from DeFiLlama, Avalanche had a TVL of $1.07 billion at the time of writing. While this is a significant recovery, it still pales in comparison to the historic highs.

We also observed a significant recovery in the network’s stablecoin market cap to a local high of $2.31 billion.

The network’s stablecoin market cap hit a low of $536.96 million in October 2023, which means it is now up by over 300%.

But just like the TVL, Avalanche stablecoin market cap is currently at a fraction of its $4.67 billion peak in 2022.

Can the TVL and stablecoin market cap recovery support AVAX upside?

Stablecoin growth and TVL are important metrics for a network’s growth and liquidity. They facilitate DeFi ecosystem growth so, technically this could signal more organic demand for AVAX moving forward.

AVAX has been on a macro bearish trend since March, which seems to have leveled out in August.

AVAX has rallied by almost 50% from its September lows. The cryptocurrency recently peaked at $30.85, but had a press time price of $29.33 after a slight pullback in the last 24 hours.

According to price data from Binance, AVAX experienced resistance at the $31 price level. After failing to push through on 11 September, the price fell and began to consolidate at the $28 level.

After another attempt to push past the $30 resistance on 2 October, the price fell again and began to consolidate at the $27 level, where it remained until another breakout on 11 October.

AVAX encountered another round of resistance at the $30.2 price level, which it failed to cross. After another attempt to push past the $30 resistance on 2 October, the price fell again and began to consolidate at the $27 level, where it remained until another breakout on 11 October.

AVAX began to experience resistance at the $30.85 price level on 12 October. After failing to push through on 13 October, the price fell and had a press time price of $29.33 on 14 October.

Source: Binance

AVAX bulls are encountering resistance, suggesting that sell pressure might be building up after its latest rally. Will another retracement take place?

Data from IntoTheBlock showed that AVAX cruisers hold nearly as many coins as HODLers.

Cruisers are essentially short-term holders whose holding duration is less than 12 months. There were 4.04 million cruiser addresses, 4.69 million HODLers and 234,000 traders at the time of observation.

Read Avalanche’s [AVAX] Price Prediction 2024–2025

The above observation suggests that AVAX might be at risk of some downside if cruisers decide to start taking profit. On the other hand, sell pressure may not be as significant especially now that the market is only just showing signs of recovery.

This means there might be some incentive for AVAX holders to wait or more potential upside.

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