Injective Protocol (INJ) has made headlines with a 61.2% surge in Total Value Locked (TVL) over the past week, a significant milestone for the blockchain’s ecosystem. However, this achievement is dampened by ongoing retail sell-offs, which have kept INJ’s price under pressure despite its recent growth.

Rising TVL Reflects Ecosystem Confidence

Injective’s TVL has high to $2.52 billion, according to data from Chainbroker. TVL measures the total value of assets staked, lent, or provided as liquidity within a DeFi ecosystem, often serving as a key indicator of blockchain performance.

Such a rapid increase in TVL suggests growing trust in Injective’s infrastructure and potential for expanded utility. However, this optimistic outlook isn’t translating into price gains for INJ.

Over the past month, INJ recorded a 9.33% increase, but in the last seven days, the token’s value has fallen by 5.06%, with an additional daily dip of 1.6%. These declines suggest that growing confidence in the protocol is being overshadowed by bearish sentiment among retail investors.

Retail Traders Drive Bearish Sentiment

Retail investors appear to be driving much of the selling pressure, as reflected by key on-chain metrics.

1. Declining Average Transaction Sizes: Data from IntoTheBlock reveals that the average transaction size has dropped to $6,419.46, indicating reduced activity and lower confidence among retail traders.
2. Drop in Daily Active Addresses (DAA):Daily Active Addresses have fallen by 15.94% over the past week. A decline in DAA often signals waning engagement from market participants, further compounding selling pressure.
3. Rising Liquidations: Bearish momentum is also evident in $754,270 worth of long liquidations as traders close their positions in response to falling prices.

These trends reflect cautious behavior among retail investors, whose selling activity continues to weigh on INJ’s price trajectory.

Whale Activity Remains Muted

While retail traders are actively influencing INJ’s market movement, large investors—or whales—have taken a backseat.

• Only one major transaction was recorded in the last 24 hours, and just 22 large transactions occurred over the past seven days.
• The lack of whale activity suggests indecision among large investors, leaving INJ’s market direction uncertain.

Typically, whale behavior can significantly impact a token’s price. A surge in whale transactions paired with falling prices often indicates bearish sentiment, while increased activity alongside rising prices signals bullish momentum. The current inactivity leaves market watchers in suspense about INJ’s next move.

Challenges Ahead for INJ

Despite the promising growth in TVL, Injective faces multiple challenges:

1. Retail Sell-Offs: Persistent retail-driven selling pressure undermines the potential for a sustained price rally, even with strong ecosystem growth.
2. Market Sentiment: Bearish sentiment among traders is reflected in reduced engagement and liquidations, which continue to hinder INJ’s price recovery.
3. Indecision Among Whales: The lack of decisive action from large investors leaves the token vulnerable to market volatility and uncertain price direction.

Can TVL Growth Reverse the Trend?

The 61.2% increase in Injective’s TVL is a testament to the protocol’s growing appeal within the DeFi space. However, without stronger market participation and a shift in retail sentiment, the surge in TVL may not be enough to offset the downward pressure on INJ’s price.

For a potential turnaround, the market will need a combination of increased whale activity, improved engagement among retail traders, and sustained confidence in Injective’s long-term utility. Until then, the protocol’s price trajectory remains uncertain, despite its impressive ecosystem growth.