The recalibration of DeFi, both in the valuation of individual tokens and TVL, has hurt AAVE.
That’s, however, not to say the project is underwater or would struggle in the days ahead.
AAVE Market Performance
Like most high-value tokens, AAVE remains one of the most valuable and the most active DeFi projects at the time of writing.
It is down, moving in lock-step with the rest of the DeFi market.
However, if there are no efforts to prevent the dump down, AAVE prices could slide back to May and June lows reading from price action in the daily chart.
At the time of writing, crypto market participants remain apprehensive and non-committal, explaining shrinking trading volumes. This, in turn, deflates momentum buildup, causing prices to retrace from recent highs.
As of July 19, AAVE is down roughly six percent on the last trading day, pushing weekly losses to double digits at 20 percent.
At the same time, trading volumes are comparatively low. For instance, trading volumes fell to around $227 million on the last trading day, sliding 14 percent.
Notably, the reaction from $300 or the 38.2 percent Fibonacci retracement level of the May to June 2021 trade range could signal the end of the pullback and possibly bear trend continuation.
This can only be nullified if AAVE prices expand above $300 with comparatively high trading volumes. In such a case, it would help steer prices in favor of bulls who are on the sidelines expecting the tide to change.
Unless things change, AAVE prices could be suppressed if on-chain metrics guides.
AAVE Bulls Under Pressure: On-chain Data points to Bears
For example, the NVT ratio is comparatively low at the time of writing. It would need a miracle for the network value to keep up with its utility, offering support for prices.
At around 34, AAVE bulls have work to do to induce market confidence and draw demand to the scene. Typically, the lower the NVT, the more selling pressure there is, quashing attempts of buyers.
Second, there seems to be a surge of outflows from non-custodial to centralized custodial wallets, pointing to possible liquidations. This doesn’t offer support for AAVE, a reason that may heap more selling pressure on the token, forcing prices from $300.
Accordingly, this is forcing some traders to call for bears.
One of Twitter expects AAVE prices to dump towards $150 in the medium term. Any uptick above $300, the trader notes, nullifies selling pressure, paving the way for buyers.
$AAVE trade setup📉
Price got rejected from the breaker so I'm anticipating a run towards those lows (red). SL above yesterday's high. Going for 4.5R
— FRAKTALZ (@FRAKTALZ) July 16, 2021
AAVE/USDT in a Bull Flag, back to $300?
Still, it is not all doom and gloom for AAVE bulls.
Trading View, RealMarketSurfer, says AAVE/USDT prices are trending lower inside a descending channel, as evident in the 4HR chart.
Traders should expect a jump to $300 once there is a close above the bull flag.
From the technical point of view, AAVE prices could find support.
The RSI on the 4HR chart turns from the oversold position, below 30, suggesting accumulation and potential recovery as buyers take charge.
At the same time, the MACD signal lines are about to print a buying signal.
On YouTube, a break to the upside could see AAVE/USDT see prices surge to $400 based.
This forecast is on the Ichimoku Cloud technical indicator.
Technical charts courtesy of Trading View
Disclaimer: Opinions expressed are not investment advice. Do your research.
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