Over the past 24 hours, AAVE has experienced a sharp sell-off of 11.27%. However, the recent decline could be prolonged, as other market developments signal a continued decline on the chart.
However, technical analysis points to a possible reversal, placing AAVE at a crossroads. Therefore, TinTucBitcoin assesses AAVE’s potential moves, based on these conflicting indicators.
Investor Outflow Leads to AAVE's Decline
According to DeFiLlama, the total value locked in AAVE has dropped significantly, which means investors are withdrawing from the protocol.
Indeed, at the time of reporting, AAVE’s TVL had dropped to $11.941 billion. If this trend continues, AAVE is likely to face further decline.
Here, TVL provides a measure of the aggregate value of assets deposited into DeFi protocols. These figures generally represent market-wide participation and capital commitment.
See also: Fed cuts, China: DeFi rises strongly
Source: DefilLama
The investor exodus can be seen in the increase in active addresses. At press time, it was up 6.85% to above 1,020, signaling increased activity, mostly sell-offs, as AAVE’s price fell on the chart.
Huge Losses for Long Term Traders on AAVE
Traders who had bet on AAVE’s continued bullish trend suffered significant losses as the market turned. According to Coinglass, $1.91 million was wiped out after traders bet on AAVE’s price going up on the chart.
Furthermore, there appears to be an imbalance between long and short positions, with a significant skew towards losses on long positions.
This negative sentiment is further reflected by Open Interest. A significant drop of 20.23% in Open Interest was recorded on the chart, indicating the potential for further sell-off by AAVE holders.
Source: Coinglass
Technical analysis indicates a possible reversal for AAVE
Technical indicators on the chart suggest that AAVE could be in a bullish position, especially as it has reached important convergences that could push its price higher.
See more: Bitcoin's power spreads, Altcoins return?
AAVE has reached a key junction on the chart, where a horizontal resistance line meets a diagonal resistance line. AAVE has responded positively to this, indicating a bullish trend. If this resistance holds, AAVE could rise to $180.74.
Source: Trading View
Conversely, if this resistance fails to hold, AAVE could decline, potentially as low as $119.
Source: tintucbitcoin.com
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