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Aave Price Analysis: Descending Wedge Breakout Could Signal Multi-Month Gains
Aave (AAVE) has confirmed a breakout from a bullish reversal pattern, signaling potential recovery after a challenging year for the DeFi token. At its peak on August 24, AAVE traded at $377, but over the next three months, it plummeted roughly 60% to $150. At press time, AAVE has rebounded to $194.5, still down nearly 49% from its August high.
Network Activity and TVL Trends
The token’s decline coincided with a slowdown in activity across the Aave network. According to DeFiLlama, total value locked (TVL) in DeFi applications on Aave dropped from $76.49 billion earlier this year to $50.9 billion on November 23. Declining TVL often reflects reduced user participation and weaker protocol usage, potentially prompting investors to explore alternatives or exit positions.
However, recent weeks have seen a rebound. TVL has climbed back above $56.7 billion, indicating renewed engagement that may have supported investor sentiment.
Whale and Smart Money Activity
Nansen data highlights a growing accumulation trend among whales and smart money investors. Over the past month, smart money wallets increased holdings by 27%, while whales boosted theirs by 7.7%, now holding over 143.6k tokens. Concurrently, AAVE balances on exchanges fell by 22.4% to 4.4 million tokens, hinting at reduced selling pressure and increasing demand.
Technical Outlook and Future Catalysts
AAVE’s daily chart confirms a breakout from a descending broadening wedge, a pattern historically followed by strong bullish reversals. Additionally, the 20-day moving average is nearing a crossover with the 50-day moving average, suggesting buyer control may be gradually increasing.
Immediate resistance sits at $204, aligned with the 38.2% Fibonacci retracement, while support is near $189.5. Analysts project that the breakout could fuel a rally toward $430 in the coming months. Aave Labs’ plan to deploy Aave V3 on MegaETH, leveraging high-speed Ethereum L2 scaling, could further boost user adoption and positively influence the token price.
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