Avalanche's AVAX Sees 40% TVL Surge, 15% Derivatives Growth Amid 33.93% Network Activity Drop

Avalanche’s AVAX has shown mixed signals as its DeFi ecosystem experienced notable growth post-Octane upgrade, yet faced challenges from declining network activity and subdued social engagement. Total value locked (TVL) in AVAX-based protocols surged 40% quarter-over-quarter, reaching $1.5 billion, driven by improved transaction speeds and reduced fees following the upgrade [1]. This technical enhancement has attracted increased liquidity, reinforcing Avalanche’s position in the competitive DeFi landscape. Concurrently, derivatives open interest for AVAX climbed over 15% to $835.44 million, signaling heightened speculative activity and institutional confidence [2]. However, these bullish metrics contrast with a 33.93% drop in new addresses and a 10% decline in active addresses over the past week, as reported by network analytics firm IntoTheBlock [3]. The divergence between on-chain capital inflows and user engagement raises questions about the sustainability of the current rally.

Price action for AVAX reflects a critical juncture as it tests the $26–$28 resistance zone, a historically significant barrier. Technical analysts note that a decisive close above this level could confirm a trend reversal and open the door for further gains [4]. The coin has formed a classic double bottom pattern and recently broke above a descending trendline, indicating potential buying pressure from DeFi inflows and derivatives traders. Yet, a failure to maintain momentum above this resistance may trigger a pullback and retest of lower support levels. This scenario underscores the importance of aligning technical indicators with fundamental metrics such as TVL and open interest to validate the strength of the current bull case.

Social metrics present a nuanced picture of AVAX’s market dynamics. While social dominance fell to 0.419%, reflecting reduced retail hype, weighted sentiment improved slightly to +0.115, suggesting cautious optimism among traders [5]. Santiment’s data highlights a growing divide between institutional confidence and broader market participation, as organic user growth remains stagnant. This imbalance could limit the rally’s reach, particularly if social engagement fails to reaccelerate. Analysts emphasize that sustained price appreciation will require renewed interest from both retail and institutional investors, coupled with improved network activity metrics.

The mixed signals underscore Avalanche’s strategic challenge: maintaining momentum in a market where technical upgrades drive capital inflows but fail to translate into widespread user adoption. The recent surge in TVL and derivatives activity indicates strong short-term potential, but the decline in new and active addresses suggests that the ecosystem’s long-term health depends on addressing user onboarding and engagement. For AVAX to solidify its bullish trajectory, a coordinated effort between technical innovation and community growth will be essential. Traders and investors will likely monitor the $26–$28 resistance zone closely, as a clean breakout could signal renewed confidence in Avalanche’s ability to compete in the DeFi space.

Sources:

[1] Title: Avalanche (AVAX) Shows Mixed Signals With Rising TVL and Resistance Test Amid Weak Network Activity July 29, 2025 (url: https://en.coinotag.com/avalanche-avax-shows-mixed-signals-with-rising-tvl-and-resistance-test-amid-weak-network-activity/)

[2] Title: CoinGlass (url: https://e.thsi.cn/img/c7f30e4290fa9b87)

[3] Title: IntoTheBlock (url: https://e.thsi.cn/img/de96a076db39e535)

[4] Title: TradingView (url: https://e.thsi.cn/img/3a6e0819d0a432c)

[5] Title: Santiment (url: https://e.thsi.cn/img/7bfe690c9c54b4e8)