Avalanche bleeds $1B in stablecoin market cap – What’s next for AVAX?

Avalanche celebrates healthy transaction growth, but it has been bleeding liquidity.
AVAX demand cools off, but can the bulls make a comeback as price enters major short term support?

At press time, Avalanche [AVAX] was hovering at the eleventh spot in crypto ranking by market cap. But can it leverage its growing transaction count to level up into the top ten, or will market pressure push it lower?

The next move for Avalanche will mostly depend on network performance. A network analysis yielded some mixed results.

For example, the Avalanche blockchain has been experiencing positive growth in terms of daily transactions.

Daily transactions soared to a 10-month high of 586,650 transactions on the 8th of January, a confirmation of healthy growth in terms of network utility.

source: DeFiLlama

While healthy daily transactions may indicate that the network is on the right track, it takes more than that to fully capitalize on growth opportunities. That requires positive TVL growth and stablecoin count.

According to DeFiLlama, both TVL and stablecoin market cap on the Avalanche network have been struggling to maintain positive growth.

For context, Avalanche had a $1.375 billion TVL, which was roughly 10% of its ATH achieved in December 2021.

Liquidity in the Avalanche network has also been declining. Stablecoin market cap soared as high as $4.68 billion in March 2022. It tanked as low as $1.051 billion at the end of November 2023.

It then recovered to as high as $2.43 billion in 2024, but it just kicked off this year with significant outflows.

Source: DeFiLlama

Avalanche’s stablecoin market cap was down by roughly $1 billion in the last 10 days. Its TVL was down by about $140 million during the same period.

AVAX approaches noteworthy support after recent dip

It was unclear whether the mixed network performance stats (growing transactions and declining stablecoins) will impact AVAX’s price.

The cryptocurrency’s price action has been moving in tune with the prevailing market conditions.

AVAX exchanged hands at $36.46 at press time after tanking by 18.7% since the start of the week.

Source: TradingView

AVAX was approaching a short term support zone near the $35 price range. This zone could potentially pave the way for a short term recovery. Historical concentration data may offer insights about the state of demand.

Whale holdings were up from 26.53 million AVAX (24.42%) as of the 1st of January, but were down to 25.59 million AVAX (24.35%) as of the 8th of January.

The most noteworthy shift was from the investor category, which controls the highest supply of AVAX.