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AAVE has been recovering from the $50 bottom
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The cryptocurrency has suffered from limited DeFi activity
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AAVE needs to overcome resistance at $71 and the descending trading channel
Aave price (AAVE/USD) touched a low of $50 on November 22. The level is a crucial support that AAVE traded at in June. Afterwards, AAVE embarked on strong bullish momentum, hitting $115 in August. If history repeats itself, AAVE buyers could look at another bullish rally that could last for a while. However, it is not that straightforward.
Since August, AAVE has been bearish. The cryptocurrency has been making lower lows and lower highs. Although the cryptocurrency recovered strongly in October, the FTX crash inspired a sharp drop to the $50 bottom. However, with AAVE trading at $62 as of press time, it gives hope that AAVE could continue to surge.
The Achilles’ heel of Aave has been a decline in DeFi activity. Aave is a leading decentralised lending ecosystem. It allows users to borrow and lend crypto assets for a reward. However, activity has been falling, with the total value locked at $3.76 billion as of press time. The TVL is a drop from $5.4 billion a month earlier. It also compares sharply to a TVL of $18.94 billion in October 2021. Consequently, a sustained recovery of AAVE could be tied to the uptick in DeFi activity and cryptocurrencies.
AAVE trades on a descending channel amid recent price recoveries
A technical outlook shows AAVE losing bullish power near the $71 resistance. This is the immediate resistance that AAVE needs to overcome to consider a further upside.
But besides the resistance, AAVE trades in a descending channel. Investors could shift attention to whether the cryptocurrency will break above the upper limit of the descending channel.
Will AAVE go higher?
AAVE is not yet bullish despite the recent recoveries. Nonetheless, a recovery above $50 should reignite hopes for buying AAVE. To consider a bullish bias, a recovery above the $71 resistance and the descending channel is needed.
Where to buy AAVE
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Aave (AAVE/USD) is currently trading for $81.59. The price represents a 10.32% increase in the past week and a 0.64% daily loss. Despite recent volatility in the crypto market, AAVE price is on an upward trajectory.
Although the sentiment could hold, the total value locked in the DeFi blockchain is on a decline. AAVE’s TVL has dipped 7% in the past week to $4.82 billion. The protocol is currently ranked fourth on DefiLlama in the TVL list, deployed across seven networks.
Besides, the whale investor activities seem not to favour AAVE. The latest data from whale alert shows that Tron’s founder, Justin Sun, transferred $50 million of USDT from Aave protocol to an anonymous wallet. Aave’s transactions in the past day have also declined. It is down 12% to $128 million in the period.
Some other fundamentals in the Aave ecosystem relate to the GHO stablecoin. The network recently released a whitepaper for digital assets. AAVE described GHO as a ‘flexible, decentralised, configurable token designed to maintain a stable value.’ From the technical outlook, AAVE struggles to clear a key resistance level.
AAVE faces resistance at $81
Source: TradingView
According to the daily price outlook above, AAVE moved from $70 on October 14 to the current price of $82. The price is a significant level that has been tested severally. Despite the MACD looking bullish with green histograms, AAVE has entered the overbought zone. Thus, it may be due for a retracement.
Concluding thoughts
Despite AAVE currently looking bullish, it is facing a hurdle at $81. However, it could not be the most appropriate price entry. First, the DeFi crypto is overbought and needs enough buyers to break above the level.
Although the MACD level looks green, AAVE is not out of the woods yet. The price must clear the current resistance to welcome a bullish sentiment. Otherwise, it could retest the immediate support level of $69.
Where to buy AAVE
eToro
eToro offers a wide range of cryptos, such as Bitcoin, XRP and others, alongside crypto/fiat and crypto/crypto pairs. eToro users can connect with, learn from, and copy or get copied by other users.
Bitstamp
Bitstamp is a leading cryptocurrency exchange which offers trading in fiat currencies or popular cryptocurrencies.
Bitstamp is a fully regulated company which offers users an intuitive interface, a high degree of security for your digital assets, excellent customer support and multiple withdrawal methods.
The negative sentiment associated with China’s crackdown on crypto has affected the market outlook of most altcoins
Aave’s price is hovering near $276 at the time of writing, with intraday action seeing bulls seek fresh momentum with a 3% uptick in early Wednesday deals. The minor change in price movement comes as the broader market looks to stem widespread downward pressure that saw Bitcoin test support around $42,000.
The altcoin market is showing resilience though and aggressiveness from the bulls could see Aave bounce alongside major alts like Ethereum, Cardano and Solana. The three coins are showing signs of a short-term positive flip after retesting key support areas around $2,900, $2.10 and $138, respectively
AAVE price outlook
The AAVE/USD pair has bounced off lows of $256 as buyers target new momentum following the decline from highs of $415 reached on 16 September. The technical outlook is, however, slightly in favour of bears as seen on the daily chart.
The breakdown from an ascending triangle pattern looks to have invalidated the bullish view in place before this week’s market downturn. There’s a hint of a bear flag formation, a pattern likely to signal bearish continuation.
We also have the 50 SMA and 100 SMA curves indicating the potential for the correction to push prices lower. The perspective below will strengthen further if the RSI makes a new low below the equilibrium point.
AAVE/USD daily chart. Source: TradingView
If this scenario plays out, fresh losses towards $250 will open up AAVE/USD to further rot to $212 and then the psychological support at $200. The next main demand zone beneath this zone is around $150.
On the upside, AAVE will likely seek a daily close above $295, an area likely to present some slight resistance. If this zone is established as support over the next two candles, bulls can target further gains above the 100 SMA ($322), with new objectives putting the 50 SMA ($360) level into focus.