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Avalanche Bleeds $1B in Stablecoin Market Cap – What’s Next for AVAX?
The recent market performance of Avalanche (AVAX) has been marred by significant losses, as the cryptocurrency bleeds a whopping $1 billion from its stablecoin market cap over the last 10 days. This decline comes amidst concerns surrounding network activity and liquidity.
While daily transactions have reached a 10-month high of 586,650 transactions on January 8th, this growth has not been accompanied by corresponding growth in TVL (Total Value Locked) or stablecoin count. In fact, both indicators have seen significant declines over the same period. The former dropped by roughly $140 million, while the latter suffered an even more drastic loss of around $1 billion.
AVAX’s price action has also mirrored the broader market sentiment, as it has plummeted by 18.7% since the start of the week. As a result, the cryptocurrency currently trades at $36.46.
Despite this bleak outlook, there may be a glimmer of hope for AVAX investors. The token is approaching an important short-term support zone near the $35 price range, which could potentially pave the way for a short-term recovery. However, any potential turnaround will require a significant shift in investor sentiment and a return to buying pressure.
It’s worth noting that concentration data reveals a significant outflow of AVAX from older categories, including investors who previously held 49.59 million coins (45.65%) as of January 1st, down to 47.06 million coins (47.78%) by January 8th. Similarly, retail investor holdings also decreased during the same period.
As a result, the next move for AVAX will likely depend on the actions of these larger investors. If they begin buying again, it could signal a reversal in sentiment and potentially spark a rebound in price. However, if they continue to sell, the downward pressure may persist.
One thing is clear: any recovery efforts will need to be accompanied by significant growth in TVL and stablecoin count. Without this crucial support, AVAX’s short-term prospects remain uncertain.
Source: ambcrypto.com
