Injective (INJ) began a recovery on Jan. 26, rising by 23% to reclaim the $40 level. Although INJ remains weak, the ongoing recovery is backed by increasing network activity.
New Binance launchpad product and a surge in DApp activity
One way to determine the health of a layer 1 blockchain ecosystem is to look at the total value locked (TVL) on the network.
Total value locked (TVL) is a metric used to determine the total U.S. dollar value of digital assets locked, or staked, on a particular blockchain network via decentralized finance (DeFi) platforms or decentralized applications (dApps).
Data from DefiLlama shows that BNB Chain’s TVL increased steadily from early January to reach a peak of $48 million on Jan. 18. Although this metric fell slightly over the last few days, it began picking up again on Jan. 25, suggesting increasing user trust in the blockchain.
From this standpoint, Injective’s growth in TVL could be explained by increase in development activity and the growing transaction volume.
Injective Commits and Volume. Source: DefiLama
The chart above shows that the development on the Injective network in terms of unique GitHub commits has been growing over the last month. At the same time, the transaction volume has spiked from $12.76 million in early January to $16.65 million on Jan. 24, suggesting increased engagement with DApps and developers on the platform.
Is INJ”s V-shaped recovery a sign of things to come?
After reaching an all-time high of $45 on Jan. 9, INJ price pulled back as sellers booked profits and the wider crypto market corrected.
Despite the correction, a V-shaped recovery chart formation can be seen on the daily timeframe, which hints at the continuation of the uptrend.
INJ bulls face resistance from the pattern’s neckline at $41. A daily candlestick close above this level would signal a possible breakout from the chart formation, projecting an uptick to $50. Such a move would represent a 20% ascent from the current price.
INJ/USD 1-day chart. Source: TradingView
The 100-day exponential moving average and the 200-day EMA were all facing upward, suggesting that the market conditions still favored the upside. The moving average convergence divergence (MACD) indicator had also began facing upwards, adding credence to Injective’s upward potential.
Note that the price’s upward trajectory will gain momentum once the MACD crosses the midline into the positive region.
On the other hand, the bears may pull the price lower with the 50-day EMA at $33, providing the first line of defense. Additional support lines could emerge from the 100-day EMA at $28 and the major support level at $20, embraced by the 200-day EMA.