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Key Takeaways:
- TVL jumped 40% after the Octane upgrade, indicating strong capital inflows.
- Open Interest and technical patterns support a potential breakout, but risks remain if leverage unwinds.
- Network and social metrics are lagging, hinting that sustained growth depends on renewed retail participation.
Avalanche’s [AVAX] DeFi ecosystem is enjoying renewed momentum following the recent Octane upgrade, which enhanced transaction speeds and lowered fees. The total value locked (TVL) has jumped nearly 40% quarter-over-quarter to reach $1.5 billion—signaling a strong return of capital to the Avalanche network. Yet as the market reacts positively, questions remain about whether this rally is sustainable.
Derivatives Market Signals Rising Speculation
AVAX’s derivatives market is flashing bullish signals, with Open Interest surging 15% in a week to $835.44 million, according to CoinGlass. This uptick suggests increased capital inflow into leveraged AVAX positions, which often precedes a continuation in upward price movement.
However, heightened leverage also introduces volatility risks, particularly if positions unwind abruptly. The sustained rise in Open Interest indicates growing trader confidence, but spot market support will be crucial to maintain upward momentum without triggering a sharp correction.
AVAX Eyes Breakout From Key Resistance Zone
On the technical front, AVAX recently completed a double bottom formation and broke its descending trendline. The asset is now testing the $26–$28 resistance range—a level that has historically acted as a major hurdle.
This setup hints at a potential bullish reversal, but traders are watching for a confirmed daily close above this resistance. A failed breakout could trigger a retest of lower supports, while sustained buying—fueled by DeFi inflows—could ignite the next leg higher.
Sentiment Turns Positive Amid Weak Social Buzz
Interestingly, AVAX’s social dominance has declined to just 0.419%, despite recent price gains. However, Weighted Sentiment has improved to +0.115, suggesting growing optimism among more informed market participants.
This divergence implies that while trader confidence is returning, broader retail and social engagement remains muted. Without increased social attention and media traction, the rally could struggle to gain widespread momentum.
One major concern is that on-chain activity has declined. Data from IntoTheBlock shows a 33.93% drop in new addresses and over 10% decline in active users over the past week. This contrasts sharply with the rising TVL and derivatives activity.
Also Read: Avalanche (AVAX) Dominates Crypto Inflows, Breaks Downtrend With Eyes on $26
This points to a capital-led rally, rather than one driven by organic user growth. Without renewed engagement and onboarding, Avalanche risks losing momentum as the initial Octane upgrade hype fades.
AVAX is currently supported by a robust combination of rising TVL, strong technical setups, and bullish trader sentiment. But fading user activity and low social engagement may pose risks to the longevity of the rally.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
