Avalanche Remains Under Pressure Despite Circle's CCTP Effort
The native currency of Avalanche, AVAX, remains under pressure despite Circle’s effort to launch a facility that will enable the direct transfer of USDC between Ethereum and Avalanche blockchains.
Avalanche (AVAX) Is Down 18% From April 2023 Peaks
Avalanche is a smart contracting platform with sub-second transaction finality and a rival of Ethereum. However, considering the first-mover advantage of Ethereum and the activity level on the pioneer smart contracting platform, Avalanche lags even though it offers high scalability translating to relatively low trading fees.
Despite the launch of the Cross-Chain Transfer Protocol (CCTP) by Circle, the team behind USDC, a stablecoin; AVAX remains under trading range and has been unable to move higher, reversing recent losses.
When writing on April 27, AVAX is down 18% from April 2023 highs of around $20 and down roughly 10% in the last trading week, according to CoinMarketCap data.
Although the market uptrend of April 26 temporarily forced AVAX higher, buyers on April 27 didn’t follow through. AVAX remains below the local resistance at $18 but above last week’s support at around $16.
However, from a broader perspective, AVAX is up 25% from March 2023 lows and has gained 65% from December 2022 lows. The impressive performance was a huge boost for AVAX, a coin that plunged 88% from November 2021 peaks when it was changing hands at around $145.
Based on the current AVAX formation, it is yet to be seen whether fundamental events will trigger demand and push the coin above $20, reversing this week’s losses.
Circle Launches Cross-Chain Transfer Protocol For USDC Transfer
The decision by Circle to develop and launch a mainnet protocol for bidirectional cross-chain transfers between Ethereum and Avalanche will be convenient for users.
It could also boost decentralized finance (DeFi) activities in Avalanche since users don’t have to use a third party, effectively eradicating the need for bridges and helping consolidate the web3 ecosystem. This would also have a significant effect on general liquidity on the Avalanche blockchain.
Avalanche is suited for the development of decentralized finance (DeFi) dapps and as of April 27, the blockchain managed over $798 million as measured by the total value locked (TVL), according to DeFiLlama. Aave, a lending protocol available in, among other chains, Ethereum, is the largest DeFi dapp by TVL, managing $262 million.
Besides liquidity, considering the mega hacks of 2022, for example, the Ronin and BNB Chain Bridge hacks, the Cross-Chain Transfer Protocol (CCTP) also boosts security for users and DeFi protocols.
Circle said several firms, including MetaMask, Celer, and Wormhole, have pledged to use the CCTP.
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