- AAVE exhibits two major bullish signals: increased holdings by top wallets and a favorable RSI indicator.
- Despite these indicators, declining network activity and market sentiment may delay a potential price rally.
AAVE’s Bullish Divergences in the Spotlight
AAVE, currently ranked 50th in market cap among altcoins, is showing signs that may suggest a potential price rally, according to data from the on-chain analytics firm Santiment. The firm’s analysis reveals two significant bullish trends for AAVE, contrasting the prevailing downward trend in the broader cryptocurrency market.
📊 #Aave has some #bullish divergences forming as it has stayed around the middle of the pack among other #altcoins. The 50th ranked market cap asset has the most coins held by the top 150 wallets in 5 months, and RSI has entered a bounce zone. https://t.co/NmRrlQRrpx pic.twitter.com/M65PEli3Uu
— Santiment (@santimentfeed) December 12, 2023
At the forefront of these bullish indicators is the observation that the top 150 wallets in the crypto market now hold the most AAVE tokens in the last five months. As of the latest data, these wallets possess 9.61 million AAVE tokens, the highest amount since July. This trend of accumulation, which started on November 5th, has resulted in a 3% increase in their share of AAVE. The growing interest from these whales is often considered a bullish sign, as their market movements can significantly influence price trends.
Another promising signal for AAVE is its Relative Strength Index (RSI), which has entered what Santiment refers to as a
The RSI, a momentum indicator for price movements, shows a reading of 38.34 for AAVE, indicating a potential reversal of its downward price movement. Historically, an RSI value below 40 has been associated with upcoming price increases, suggesting a possible positive correction for AAVE.
Caution Amidst Bullish Signals
Despite these bullish divergences, a closer examination of other on-chain metrics suggests that a reversal in AAVE’s price may not be imminent. A key concern is the decline in AAVE’s network activity over the last month. The token’s daily active address count, observed on a 30-day moving average, has seen a 17% decrease. Similarly, new demand for AAVE has fallen by 24% in the same period. For a significant upward price correction to take place, there needs to be a noticeable increase in demand for AAVE.
Additionally, the overall market sentiment towards AAVE is currently negative, with its Weighted Sentiment standing at -0.492. This general pessimism, coupled with low trading activity involving the altcoin, could impede immediate price growth.
Another aspect to consider is the token’s Futures market, which has experienced a steady decline in Open Interest since late November. Data from Coinglass shows a 31% dip in AAVE’s Open Interest since November 25th. A decrease in Open Interest often indicates that traders are closing existing positions without opening new ones, potentially signaling a lack of confidence in the asset’s short-term prospects.
In summary, while AAVE displays certain bullish trends, the altcoin faces several challenges, including declining network activity and market sentiment, that may delay any potential price rally. As the cryptocurrency market navigates through these complex dynamics, AAVE’s future performance remains a subject of keen interest among investors and market analysts.