The price of Avalanche (AVAX) has climbed again over recent trading sessions after Terra purchased $200 million worth of the token. The token traded at $88.10, up from this week’s low of $81.56. However, this price remains roughly 14.6% below its peak for the year.
Growth for Avalanche is slowing
Avalanche is one of the more prominent “Ethereum killer” platforms in the industry. Its developers have built an ecosystem where creators can deploy a wide range of applications. Today, Avalanche is widely used by teams building decentralized finance (DeFi) products and NFTs.
The network is known for very fast transaction speeds and low fees. Developers have also announced incentive programs worth millions of dollars to attract projects to the ecosystem.
For example, in 2021 the team launched Avalanche Rush, a fund designed to support builders across multiple sectors. This year they introduced another program, a fund of more than $200 million aimed at developers building metaverse projects.
As a result, Avalanche’s ecosystem expanded. According to DeFi Llama, total value locked (TVL) in the network rose above $10 billion. Notable projects in the ecosystem include Trader Joe and BENQI.
Despite this growth, Avalanche’s price has struggled in recent weeks amid signs of stress within the ecosystem. After surpassing $10 billion in TVL, data indicates growth has cooled, as shown in the charts below. For example, Curve’s TVL declined about 23% over the past month while Platypus Finance saw a drop of more than 25%.
This slowdown is largely driven by growing competition in the DeFi space, with an increasing number of projects vying for liquidity and users. Newer entrants gaining attention include VVS Finance and Anchor Protocol.
Avalanche price outlook
On the four-hour chart, Avalanche’s price has been in a pronounced downtrend for several weeks. That decline reversed slightly in recent sessions following Terra’s large purchase.
However, a closer look shows the recovery remains tentative. The price has failed to break above the 50-day moving average, which suggests the rally lacks conviction. Consequently, AVAX could resume its bearish trend in the coming days. If selling pressure returns, the next key support to watch is around $80.