Avalanche (AVAX) is displaying a potentially bullish chart setup, with buyers actively defending key support levels. A confirmed breakout could strengthen momentum and improve the token's near-term outlook as traders watch for further upside. At the same time, Avalanche's DeFi ecosystem is gaining traction, with rising liquidity signaling stronger participation across the network.

At the time of writing, AVAX is trading at $7.40 with a 24-hour trading volume of $170.36 million and a market capitalization of $3.2 billion, according to CoinMarketCap. After a 1.75% gain over the last 24 hours, the AVAX price structure and TVL growth point toward a bullish reversal ahead.

Source: CoinMarketCap's X Post

AVAX Eyes $8.41 as Bullish Setup Emerges

According to crypto analyst CryptoJack, AVAX is showing a potentially bullish setup on the four-hour chart, drawing attention from traders watching for signs of a larger price move (CryptoJack's X Post).

The current structure suggests momentum could strengthen if buyers continue to defend key levels and resistance begins to weaken. This setup has raised expectations of increased volatility over the next several trading sessions.

If bullish sentiment gains further pace, the AVAX price may have an upside target in the $8.41 zone. However, the cryptocurrency will need to break through the immediate resistance level to reach that target. Should the breakout fail, the price may retreat lower while awaiting a fresh breakout attempt.

Avalanche DeFi Growth Pushes TVL to $488.5 Million

Data from MSB Intel highlights that Avalanche's DeFi ecosystem is gaining momentum, with total value locked (TVL) on the platform reaching $488.5 million (MSB Intel's X Post).

TVL represents the amount of capital users have deposited into DeFi protocols, including decentralized exchanges, lending protocols, and liquidity pools, among others. An increase in TVL can indicate growing confidence in Avalanche's DeFi platform. For context, Avalanche — a layer-1 blockchain launched in 2020 by Ava Labs and known for its subnet architecture, which lets projects deploy customizable blockchains atop the main network — recorded significantly higher TVL during the 2021 DeFi boom, so the current figure reflects a network rebuilding its DeFi footprint from a much smaller base.

This expansion could also bolster Avalanche's broader ecosystem, as liquidity helps drive transaction volume, lending activity, and decentralized applications (dApps). A sustained rise in TVL may support sentiment around AVAX as long as network usage continues to grow. It is worth noting, however, that TVL can be influenced by many factors, including token price, which makes monitoring adoption and liquidity metrics worthwhile.

What Happens Next?

AVAX holders are watching for a breakout above resistance levels as the next indication of a potential move toward $8.41. Continued growth in DeFi TVL and on-chain activity would support the bullish case. Conversely, a failure to break above resistance or a weakening of support could stall the recovery.

This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.