Altcoin

Avalanche (AVAX) posts triple-digit monthly gain as TVL surge points to user growth


AVAX, the native token of the Avalanche ecosystem has surprised the market, posting double-digit gains amid a drawback in the wider crypto space. AVAX token smashed through the $40 barrier on Dec.12 to reach an intra-day high of $43. At the time of publication, the layer 1 token trades at $38, up 12% over the last 24 hours and 123% over the last 30 days.

AVAX’s market cap soars 341% in two months

The latest rally has seen Avalanche’s total market value grow more from $3.25 billion when the recovery started in mid-October to the current value of $14.35 billion. This represents an increase of over $341% in just two months.

This is $1.06 billion more than Dogecoin’s $13.29 billion, flipping it to secure the ninth position on the CoinMarketCap ranking.

AVAX’s Market Capitalization. Source: CoinMarketCap

AVAX’s market capitalization has also increased by 200% over the last 12 months, from $4.04 billion recorded in December 2022.

AVAX is not the only crypto soaring within the Avalanche ecosystem. JOE (JOE) — the native token of Avalanche’s decentralized exchange Trader Joe, and QI – the native token of Avalanche’s liquid staking protocol Benqi, are also surging, with 5% and 20% gains respectively over the last 24 hours.

Coq Inu (COQ), a memecoin built atop Avalanche, is also recording an amazing performance after climbing 22% over the same period.

In a Dec. 11 crypto fund flows report, CoinShares head of research James Butterfill wrote that while majors such as Bitcoin and Ether suffered steep price declines this week, Solana (SOL) and Avalanche had seen inflows of $3 million and $2 million respectively, remaining “firm favorites” in the altcoin sector.

This interest could be fueling Avalanche’s rally, but is the upside over?

Fundamentals and a surge in user activity back Avalanche’s uptrend

Avalanche trades above an important demand area stretching from $15 to $20. Note that this is where all the major moving averages lie, suggesting that AVAX enjoys robust support on the downside.

Buyer congestion around the said support level is likely to provide the tailwind required to propel higher. If this happens, the bulls may try to push the token to new yearly highs as more buyers enter the market.

AVAX/USD Daily Chart. Source: TradingView

The relative strength index (RSI) was moving upward within the overbought region at 89 suggesting that the bulls were in full control of the price. Moreover, all the major moving averages were positioned below the price price and were facing upward, adding credence to the bullish outlook.

The significance of the support zone between $15 and $20 was supported by on-chain metrics from IntoTheBlock’s global in/out of the money (GIOM) model, which showed that AVAX sat on relatively robust support compared to the resistance it faced upward. For example, the major support level at $20 lies within the $18 and 30 price range, where approximately 19.62 million AVAX were previously bought by roughly 822,020 addresses.

Avalanche GIOM Chart. Source: IntoTheBlock

Related: Avalanche was ‘undervalued’ before posting 79% weekly gain — Analysts

Further validating the positive outlook for Avalanche was total value locked (TVL) data that reflects growth within the project’s ecosystem.

An analysis of the TVL data helps understand investor and developer interest in a blockchain or a decentralized application (dApp). TVL is similar to bank deposits for decentralized finance (DeFi) projects and may influence the market’s direction.

Total Value Locked on Avalanche. Source: DeFiLlama

According to the chart above, there is clear evidence that the TVL on the Avalanche blockchain has been increasing in tandem with the price. Data from DeFi TVL aggregator DeFiLlama revealed that the amount locked on Avalanche rose from $482.93 million on Oct. 15 when AVAX price began rising to the current value of $911.12 million. This represents a 90% increase.

This increase in TVL is a sign of increasing demand among large on-chain users. This is highlighted by increasing development activity, an on-chain metric used to assess the progress and innovation of cryptocurrency projects.

According to Santiment, the development activity on Avalanche has increased from 44 GitHub commits in mid-October to 284 GitHub commits on Dec.12.

Development Activity on Avalanche. Source: Santiment

This increase in development activity is also deemed bullish as it signals increased network users which in turn leads to increased demand for the AVAX token.

The increase in development activity for the smart contracts protocol has emerged from the latest developments within the ecosystem. For example, JP Morgan’s blockchain Onyx announced last month that it was using an Avalanche subnet in a proof-of-concept trial under the Monetary Authority of Singapore’s Project Guardian.

On Dec. 12, Avalanche announced that the creator of popular games Pegaxy and Petopia, Mirai Labs is migrating its ecosystem from Polygon to an Avalanche subnet.

The Avalanche Evergreen subnet is an individual blockchain that is specifically designed to suit the needs of institutions with extra consideration given network privacy, gas features, and being permissioned.