The Aave price has reversed hard from a key area of resistance. Furthermore, the market-leading DeFi protocol has witnessed a sharp draw-down in TVL. Net outflows from Aave, the decentralized lending and borrowing protocol, have seen its assets drop by over $1 billion to just under $15b in the last week. As a result, the AAVE price is on the slide and in danger of breaking down.
Aave (AAVE) sits atop the decentralized Finance (DeFi) leader board, and its multi-chain protocol enjoys a large slice of the $157b DeFi market. However, in the last few days, Aave has been losing ground against some of its rivals. This has forced the token price to lose the $400 level and slide towards a significant support area. Furthermore, if the Aave price continues to bleed lower, the selling may accelerate.
Over the last month, the crypto market, in general, has returned to form. Bitcoins’ ongoing assault on $50k has led to massive outperformance in altcoins, particular Non-Fungible Token (NFT) and DeFi-related assets. This helped Aave add more than 177% from the June lows to a high of $455.17 earlier this month. Although since then, the price has not only struggled to advance but shaved $100 from its value. This prompted our last report to ask the question, ‘Is the rally starting to break down?’. And right now, it appears that it is.
The daily chart shows the Aave price reversed from the confluent resistance offered by two significant trend lines. On the 16th of August, the price was rejected at $455.00, where a falling trend from the June high of $707.67 met with a rising trend line to combine critical resistance.
Following the rejection, the price is now testing the support offered by the 50, and 100-day moving averages between $341 and $352.55. Below the 50 and 100 sits the important 200-day average at $318.62. A failure to maintain $318.62 brings a rising trend line at $281.00 into view.
However, this bearish scenario is unlikely to play out unless the crypto market suffers an almighty setback. I expect the Aave price will run in to scale down buying between here and the 200-day before turning higher. An obvious target for the bulls is the descending trend line which is now seen at $421.00, and above that, the rising trend at $459.00 follows. Successful clearance of $459.00 clears the path for a run at the June high.
AAVE Price Chart (Daily)
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