New data shared by CryptoQuant sheds light on the Total Value Locked (TVL) dynamics within the TRON ecosystem, offering a closer look at the signals behind the recent surge in on-chain liquidity.
TVL measures the total capital locked in TRON-based protocols, particularly in lending platforms.
According to analysis, shared by CryptoQuant, TVL and TRX price often move in tandem — when TVL increases, TRX typically follows. This reflects growing user confidence, expectations for higher yields, and increased demand for leveraged positions.
Such capital inflows can trigger a feedback loop, boosting on-chain liquidity and helping to support higher TRX prices in the short term.
Falling TVL: Warning Signs for TRX?
On the flip side, a drop in TVL suggests capital outflows and heightened risk aversion. This can stem from rising volatility, regulatory uncertainty, or better returns in other ecosystems. A falling TVL weakens liquidity, making the TRX price more vulnerable to downside pressure.
TVL and Market Sentiment: Between Greed and Caution
CryptoQuant warns that while rising TVL is generally bullish, sharp and sudden spikes may reflect excessive greed. Yield-chasing behavior often leads to inflated TVL figures, which paradoxically signal market tops rather than sustainable growth.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
Source: https://coindoo.com/market/trons-rising-tvl-bullish-momentum-or-a-cautionary-signal/