AAVE Price Experiences Brief Rebound Amidst Market Turbulence

AAVE Price Experiences Brief Rebound Amidst Market Turbulence

On Monday, AAVE experienced a brief respite from selling pressure, rising 3% to $94. However, with Bitcoin, the leading cryptocurrency, struggling to maintain its position above $60,000, the altcoin market faced significant overhead resistance, suggesting the potential for a prolonged decline.

AAVE Price Faces Critical Support Break Amidst Massive Market Liquidations

Aave, a key player in the DeFi lending sector, saw unprecedented liquidations amounting to $300 million last week as Ethereum’s price dropped by 25%. This downward trend, exacerbated by a broader market sell-off, led to substantial liquidations of stablecoin loans collateralized by wrapped staked ETH (wstETH). As a result, AAVE’s price fell below the crucial $100 support level.

Nevertheless, a recent update from Intotheblock highlights that despite the volatility, the protocol managed to generate $6 million in profits for the Aave DAO. This situation underscores both the risks and the resilience of decentralized finance platforms in managing extreme market conditions.

Additionally, the AAVE network has seen a significant 28.83% increase in short-term traders over the past month. This rise indicates an influx of new users and short-term speculators attracted by the recent market volatility and potential for quick profits.

AAVE Price at Risk of Extended Downtrend

The recent market sell-off triggered a high-momentum correction for AAVE, evident in a V-top reversal on the daily chart. This bearish reversal caused the asset to drop from $118 to $93.7, representing a 20.6% loss.

The price has recently fallen below the daily Exponential Moving Averages (20, 50, 100, and 200), signaling a strengthening bearish trend. If this selling pressure continues, AAVE price could potentially fall 14% to test the long-standing support trendline at the $80 level.

This trendline, which has provided significant support since September 2023, represents a key accumulation zone. A break below this level could signal a major downward shift.

Conversely, the decline in AAVE price is accompanied by decreasing trading volume, suggesting a lack of interest in new short positions. This often precedes a reversal from major support or resistance levels.

Therefore, if AAVE can hold above the support trendline, buyers may step in to push the price back above the $100 mark.