As of the latest data, Avalanche [AVAX] held the eleventh position in the cryptocurrency ranking based on market capitalization. However, can it harness its increasing transaction volume to rise into the top ten, or will external market forces drive it downwards?
The future trajectory of Avalanche largely hinges on its network performance. An analysis of the network has presented a combination of results.
For instance, the Avalanche blockchain has witnessed substantial growth in its daily transaction volume.
Daily transactions surged to their highest level in 10 months, reaching 586,650 transactions on January 8, underscoring a robust expansion in network utility.
While a healthy volume of daily transactions suggests the network is progressing well, seizing growth opportunities demands more than that. Such opportunities necessitate positive growth in Total Value Locked (TVL) and stablecoin holdings.
According to data from DeFiLlama, both the TVL and stablecoin market cap on the Avalanche network have been facing challenges in maintaining consistent growth.
For context, Avalanche’s TVL stood at $1.375 billion, approximately 10% of its all-time high recorded in December 2021.
Liquidity within the Avalanche network has also been dwindling. The stablecoin market cap surged to $4.68 billion in March 2022, plummeted to $1.051 billion by the end of November 2023, then rebounded to $2.43 billion in 2024, signaling significant recent outflows.
Over the last 10 days, Avalanche’s stablecoin market cap has witnessed a decline of about $1 billion, while its TVL dropped by around $140 million within the same timeframe.
AVAX Nears Notable Support Levels Following Recent Decline
It remains uncertain whether the mixed network performance metrics (rising transactions and falling stablecoin levels) will impact the price of AVAX.
The cryptocurrency’s price movements have been aligning with the broader market conditions.
At present, AVAX was trading at $36.46 after experiencing an 18.7% decrease since the beginning of the week.
AVAX is approaching a key short-term support area around the $35 range, which could potentially signal a temporary recovery. Examining historical concentration data might provide insights into demand dynamics.
While whale holdings decreased from 26.53 million AVAX (24.42%) on January 1 to 25.59 million AVAX (24.35%) on January 8, the most significant shift was observed among investor holdings, the largest AVAX holders.
Investor holdings decreased from 49.59 million coins (45.65%) to 47.06 million coins (47.78%).
Retail investors also reduced their holdings from 32.51 million AVAX (29.93%) to 32.43 million AVAX (30.87%) during the same period.
Analysis of historical concentration data confirmed a decrease in holdings across all major categories, indicating a cautious stance among investors.