Avalanche TVL soars back above $1B as AVAX bulls face resistance

• Bullish activity breathes more life into Avalanche TVL and stablecoin market cap.
• Can AVAX hold on to recent gains as sell pressure gradually creeps back in?

The Avalanche [AVAX] ecosystem has been experiencing a resurgence of activity as the market enters recovery mode. On-chain data revealed significant changes in some of Avalanche’s metrics, especially 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 experienced heavy outflows during crypto winter.

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

Source: DeFilLlama

Avalanche had a $1.07 billion TVL at the time of writing. While this is a noteworthy recovery, it still pales in comparison to the historic highs. We also observed significant recovery in the network’s stablecoin market cap to a $2.31 billion local high.

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

Source: TradingView

AVAX bulls are starting to experience resistance, suggesting that sell pressure might be building up after its latest rally. Will another retracement take place? IntoTheBlock data showed that AVAX cruisers hold almost as much coins as HODLers.

Cruisers are equivalent to 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.

Source: IntoTheBlock

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.