The Avalanche (AVAX) price has crawled back in the past few trading sessions after Terra bought $200 million worth of the token. The coin is trading at $88.10, which is slightly above this week’s low of $81.56. This price is still about 14.6% below its highest point this year.
Avalanche growth slowing
Avalanche is one of the best-known Ethereum-killers in the industry. Its developers have built a platform where people can build all types of applications. Today, Avalanche has been used widely by developers building decentralized finance (DeFi) and non-fungible token (NFT) platforms.
Avalanche is known for its blazingly fast speeds and low transaction costs. At the same time, the developers have unveiled millions of dollars in incentive fees for developers building in its ecosystem.
For example, in 2021, they launched Avalanche Rush, a fund that went to people building apps in all industries. This year, they unveiled another fund worth more than $200 million for developers creating metaverse projects.
As a result, the Avalanche ecosystem has been growing. According to DeFi Llama, the total value locked (TVL) in the ecosystem has grown to more than $10 billion. Some of the best-known projects in the ecosystem are Trader Joe and BENQI.
However, the Avalanche price has struggled in the past few weeks after signs of strain emerged in the ecosystem. After reaching the $10 billion mark, data shows that growth of TVL has been a bit strained as you can see in the chart below. For example, the Curve TVL has dropped by 23% in the past month while Platypus Finance TVL has dropped by over 25%.
This slowdown is mostly because the DeFi industry is getting crowded as the number of projects increases. Some of the best-known projects that have come up are VVS Finance and Anchor Protocol.
Avalanche price prediction
Turning to the four-hour chart, we see that the Avalanche price has been in a deep downward trend in the past few weeks. This drop has reversed in the past few sessions after the large purchase by Terra.
However, a closer look shows that this recovery has been unconvincing. Besides, it has failed to move above the 50-period moving average. Therefore, there is a likelihood that AVAX price will resume the bearish trend in the coming days. If this happens, the next key support level to watch will be at $80