As a seasoned crypto investor with over a decade of experience navigating the volatile waters of the digital asset market, I find myself both intrigued and wary by the current state of Aave (AAVE). The recent surge in liquidations, while unfortunate for those caught in the crossfire, has proven the resilience of decentralized finance platforms like Aave. However, the breaking of the $100 support level is a concerning development that should not be ignored.
On Monday’s trade, AAVE’s price temporarily eased from selling pressure, climbing 3% to reach $94. Yet, as the trailblazer in cryptocurrency, Bitcoin faced challenges maintaining its position above $60000, which led to a significant supply overhead in the altcoin market. This could potentially indicate a prolonged decrease.
AAVE Price Loses Key Support As Massive Liquidations Sweep the Market
Last week, Aave, a well-known decentralized finance lending platform, experienced its largest-ever liquidation of approximately $300 Million. This significant event was spurred by a 25% drop in ETH‘s value and a broader market sell-off. The decline led to numerous liquidations of stablecoin loans backed by wrapped staked Ether (wstETH). During this unusual occurrence, the price of Aave dipped below its $100 support level.
On the other hand, a recent tweet from Intotheblock showcases the volatility that not only poses risks but also brings benefits, such as $6 million in profits for Aave DAO. This incident emphasizes the resilience and ability of decentralized finance platforms to navigate through challenging market circumstances.
As a seasoned cryptocurrency investor with years of experience under my belt, I have seen the volatile nature of this market firsthand. This week, I witnessed Aave undergo its largest liquidations to date, with close to $300 million being liquidated. The majority of these liquidations stemmed from stablecoin loans against wstETH collateral, as ETH experienced a significant drop of 25%.
The protocol remained strong, adding $6M in profits to the Aave DAO.
— IntoTheBlock (@intotheblock) August 10, 2024
Furthermore, there’s been a significant 28.83% increase in short-term traders on the AAVE network over the last month. This spike indicates a rise in new users and short-term investors jumping into the market, possibly drawn by recent market fluctuations and chances for swift profits.
AAVE Price Poised For Prolong Downfall
In simple terms, the price of AAVE experienced a strong correction after a rapid increase, as shown by a reversal pattern called a “V-top” on its daily chart. This bearish reversal caused the value to drop from $118 to $93.7, resulting in a decrease of approximately 20.6%.
1. Lately, the cost has dropped significantly below its daily Exponential Moving Averages (20, 50, 100, and 200), suggesting that sellers are gaining more control over the altcoin. If this selling pressure persists, it’s possible for AAVE to dip by approximately 14%, reaching the long-term ascending trendline at $80.
Starting from September 2023, this continuous buildup has led to a substantial increase. A drop below this point might initiate a significant decline.
Instead, the decline in AAVE’s price might be due to reduced trading activity, suggesting that traders are not inclined to open short positions. Such a trend may signal a potential shift from significant support or resistance levels, often leading towards a reversal.
If the coin’s price continues to stay above its support line, there’s a possibility that buyers might retaliate and push the price back up towards the $100 level again.
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2024-08-12 23:49