As an experienced analyst, I believe the current trend in AAVE is bearish due to several reasons. The price of AAVE has plunged below the $100 psychological level as Bitcoin’s price dipped below $70,000. This downturn indicates extended consolidation for AAVE and other top assets. Additionally, the swelling volume of high-risk loans on the Aave Protocol reaches new heights, creating a liquidation risk for buyers if the broader market takes another dip.
As an analyst, I’ve observed that the cryptocurrency market underwent renewed supply pressure this week following Bitcoin‘s price drop below $70000. This overhead supply suggests an extended consolidation period for various top assets, including AAVE, as it falls short of the psychologically significant $100 level. Furthermore, the surge in high-risk loans on the Aave Protocol has resulted in record volumes. Should the broader market experience another downturn, these buyers face a potential liquidation risk.
High-Risk Loans on Aave Soar to $1 Billion Amid DeFi Market Surge
In simple terms, the short-term outlook for AAVE’s price trend is bearish based on the forming lower highs in its daily chart. These successive high points are connected by a descending trendline, acting as a significant resistance level that strengthens sellers’ confidence in capitalizing on price bounces.
Over the past two weeks, I’ve noticed that Bitcoin’s price has been relatively stable, leading to sideways movements for various altcoins. However, this consolidation period took a significant toll on AAVE as its price plummeted by 18.5%, from $114.7 down to $91.5. Consequently, the cryptocurrency’s market capitalization dropped to a value of $1.39 billion.
In the rapidly expanding decentralized finance (DeFi) industry, there is growing apprehension regarding the surge in potentially risky loans. Based on data from IntoTheBlock, a prominent crypto analytics company, an astounding $1 billion worth of high-risk loans now exist on the popular DeFi lending platform Aave.
As DeFi loans hit multi-year highs, the volume of high-risk loans is also surging.
On Aave, the aggregate value of loans with high risk has surpassed the $1 billion mark. These loans are backed by unstable assets and hover close to the liquidation point, presenting considerable dangers.
— IntoTheBlock (@intotheblock) June 8, 2024
As a crypto investor, I’m closely monitoring my portfolio with the help of IntoTheBlock’s data. Recently, I’ve noticed a striking surge in the value of my riskier assets, which are collateralized by volatile cryptocurrencies. These assets are now precariously close to their liquidation thresholds. This situation is causing me concern because if these loans get triggered, it could lead to widespread liquidation events that might negatively impact the broader crypto market.
As an analyst, I would interpret the current correction trend as potentially leading to significant sell-offs in AAVE. If this unfolds, the price could take a heavy hit, possibly dropping down to the $80 mark. Such a decline might in turn ignite panic selling among traders, causing the asset’s value to plummet further, potentially reaching the $61 level.
AAVE Price Prediction Hints Rally to $250 As Triangle Pattern Emerges
As a researcher studying the price trends of AAVE, I’ve noticed an intriguing pattern in the weekly chart. The price seems to be moving sideways between two converging trend lines, indicating a potential symmetrical triangle formation. This consolidation phase suggests that the market is gathering momentum for a significant directional move in the future.
To take back command of this asset, investors must look for a breakthrough above the trendline’s resistance level. This significant breach would indicate a shift in the trend and fuel a surge past the $250 threshold.
Technical Indicator:
- Exponential Moving Average: The AAVE price breakdown below the 200-day EMA signals the sellers strengthening their grip over this asset.
- Relative Strength Index: The daily RSI slope falling to 42% accentuates a bearish sentiment among market participants.
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2024-06-09 19:20