AAVE Price Soars 9% During US Trading, Breaking a Two-Year Accumulation Phase

AAVE Price Soars 9% During US Trading, Breaking a Two-Year Accumulation Phase

On Monday, AAVE surged 9%, emerging as one of the top gainers on CoinMarketCap. Following a six-day rally, the altcoin broke out of a prolonged two-year accumulation phase, climbing back to the $180 mark, a level not seen since late April 2022. However, questions arise about the sustainability of this recovery.

Is AAVE Entering Overbought Territory After a 30% Weekly Surge?

AAVE’s daily chart illustrates a sharp price rally last week, jumping from $134 to $176—an impressive 32% increase. Backed by substantial trading volume, this bullish momentum led to a decisive break past the $153 resistance level, officially ending the two-year accumulation period.

On the weekly timeframe, the recovery aligns with the formation of a Rounding Bottom pattern, a well-known reversal signal. This saucer-shaped structure marks a gradual shift from a long-standing downtrend to accumulation, followed by a surge in buying pressure.

If this buying momentum holds, AAVE could see another 12% gain, challenging the $200 psychological resistance. Beyond that, an extended rally might push the price toward $260.

Data from Santiment reveals that whale wallets holding between 1 to 10 million AAVE tokens have been aggressively accumulating since early August 2024, now amassing $4.2 million worth of AAVE. This whale activity could play a significant role in supporting AAVE’s ongoing recovery.

However, caution is warranted. AAVE’s price has significantly outpaced its 20- and 50-day exponential moving averages, which may signal an unstable overextension and could trigger a bearish pullback.

Additionally, the Average Directional Index (ADX) has climbed to 35%, suggesting the rally could soon lose steam as buyers approach exhaustion.

The 30-day Market Value to Realized Value (MVRV) ratio has surged by 23%, indicating that short-term traders are now in profit. Historically, such elevated MVRV levels have coincided with price peaks, as speculative traders often cash out, leading to a potential price pullback.

Given these signals, AAVE may experience a short-term correction to stabilize and gather momentum for its next upward move.