Will Avalanche’s ecosystem growth aid AVAX’s price?
Journalist
Posted:
- Avalanche’s ecosystem has experienced massive growth of late.
- Despite ecosystem growth, AVAX’s price declined, exhibiting lower lows and highs.
Avalanche [AVAX] has seen massive growth over the last few months in terms of its ecosystem.
A sudden spike in activity
In Q4 2023, the network experienced notable spikes in on-chain activity, reaching 6.4 million transactions on the 22nd of November and 6.3 million transactions on the 19th of December.
The first surge was initiated by ASC-20s, while the second was driven by increased activity related to meme coins. These spikes led to sustained growth, with new users surpassing active users by 17.7% at press time.
In terms of on-chain activity, January’s total daily transaction volume grew by 36.4% relative to October (19.2 million transactions vs. 14.1 million).
This growth was increasingly distributed across new subnets and projects, with over 249.4k new contracts deployed between Q4 2023 and the 2nd of February, hosting 75.3 million total subnet transactions.
Source: Artemis
Taking a look at the state of DeFi
Avalanche’s Total Value Locked (TVL) began rising in early Q4 2023, peaking at $1.53 billion on the 21st of December and consistently remaining above $1 billion since then.
This TVL increase was propelled by prominent protocols such as Benqi, Aave, Struct, and Delta Prime. Notably, Benqi Finance accounted for over 40% of the network’s TVL on the 21st of December.
Trader Joe continued to dominate Avalanche’s DeFi scene, attracting more trading volume than all its competitors combined.
Although overall DeFi activity on Avalanche has seen a gradual decline since the end of 2023, the network’s daily Real World Asset (RWA) market cap increased by 44.7% between October 2023 and February 2024.
Source: Artemis
How is AVAX holding up?
Despite these factors, the price of AVAX declined significantly over the last few days. During this period, lower lows and lower highs were exhibited by the price. However, there was no significant trend established.
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At press time, AVAX was trading at $37.98. If its price declines further, the token could reach the $27.29 support level soon.
On the contrary, if the price of AVAX grows, it could weaken the $43.52 resistance level and may even push past it.
Source: Trading View
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