Surging to a notable six-month peak of $20 in the previous week, Avalanche (AVAX) has attracted substantial investor attention, prompting an exploration of the fundamental drivers behind this impressive upward price movement.
Some analysis have singled out the resurgence of GameFi within the Avalanche ecosystem as a pivotal catalyst potentially fueling additional gains in AVAX.
Specifically, on Monday, AVAX revisited the $20 threshold, marking a significant milestone as this price level hadn’t been seen since April 2023.
The GameFi revival as a major growth catalyst suggests that the intersection of decentralized finance and gaming applications within the Avalanche network holds considerable promise.
As the market absorbs this resurgence, questions naturally arise about the sustainability of the bullish momentum and the underlying factors contributing to the recent breakout in AVAX’s price.
In light of these developments, a deeper analysis is warranted to understand the potential extent to which the bulls can propel this rally and the broader implications of the GameFi revival within the context of the Avalanche ecosystem.
AVAX market cap currently at $6 billion. Chart: TradingView.com
As optimism permeated the cryptocurrency sector, the prosperity of ecosystems experienced a widespread upswing across diverse networks.
Avalanche (AVAX) seamlessly joined this trend, affirming its participation in the prevailing positive sentiment within the crypto space. This collective ascent underscored the buoyancy of various networks, including AVAX, as they navigated the evolving landscape of the digital asset market.
Meanwhile, TraderJoe, a prominent decentralized exchange (DEX) on the Avalanche network, has witnessed an impressive growth, marked by a significant surge in trading volume and fees collected over a specific period.
Watching @TraderJoe_xyz as a dual play both on Avalanche and Arbitrum.
– Trading volume +112%
– Fees +146%
– Supply-side fees rose to $138,000
– Trading Volume by chain: 74% Avalanche/ 25% Arbitrum
Trader Joe enjoys the volume from both narratives. pic.twitter.com/0BkP3zzU7V
— Emperor Osmo🧪 (@Flowslikeosmo) November 13, 2023
The trading volume experienced an increase of more than 100%, indicating a substantial uptick in user activity on the platform. Simultaneously, fees generated from trading activity soared by an impressive 146%, reaching a substantial sum of nearly $140,000.
At the time of writing, AVAX was trading at $17.03, down 6.5% in the last 24 hours, and tallied a solid 32.4% in the last seven days, data from Coingecko shows.
This surge in supply-side fees underscores the increasing utilization of the TraderJoe platform within the Avalanche network. The distribution of trading activity reveals that a substantial majority, accounting for 74%, occurred on the Avalanche chain, emphasizing the platform’s popularity within the Avalanche network. The remaining 25% of trading took place on Arbitrum [ARB].
Avalanche Network Activity Tells A Different Story
As this developed, another interesting aspect has been observed in the network: In the last quarter, activity on the Avalanche network experienced a downturn, witnessing a decline in both transaction volume and active addresses on the prominent “C-Chain” compared to the preceding quarter of 2023.
Data sourced from DeFi Llama indicates a nearly 30% slump in Avalanche’s total value locked (TVL) during Q3, plummeting from $706 million to $512 million. Although there has been a subsequent 10% rebound in TVL to $564 million, daily transactions continue to linger at a lower figure, standing at 232,000.
AVAX Price In Peril?
Nansen’s data reveals that daily active users reached a peak of 86,000 in Q3, showcasing a decrease from the previous quarter’s 117,000. The daily active transactions also saw a drop, ranging from 136,000 to 504,000, a significant shift from the previous range of 200,000 to 550,000. Notably, on October 15, this metric hit a low of 110,000.
While these metrics don’t bode well for the immediate past, whether this decline imperils AVAX’s price trajectory remains a complex question. The broader market sentiment and the network’s adaptability to emerging trends, especially in the dynamic realm of decentralized finance, will likely play pivotal roles in determining the future of AVAX’s price.
(This site’s content should not be construed as investment advice. Investing involves risk. When you invest, your capital is subject to risk).
Featured image from iStock