AAVE: As downtrend persists, shorting remains the way ahead
AAVE extended its bearish momentum, with price dropping to the June low of $50.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- AAVE extended its bearish swing with a break of a key support level.
- Dipping Open Interest suggested a continuation of the bearish trend.
The turbulence in the crypto market showed no sign of slowing down with Bitcoin [BTC] trading below $26k. In like manner, altcoins have experienced notable price drops.
How much are 1,10,100 AAVEs worth today?
AAVE’s 17% fall within the past 48 hours sunk it to the June lows of $47 – $51. If BTC continues its dwindling price action, AAVE could retreat lower as sellers seek more ground.
Bearish momentum gained more ground
AAVE’s market structure flipped bearish on the 12-hour timeframe after sellers broke the bullish lower at the start of August. The bearish trendline kept price trending lower, although bulls put up a defense at the $61 support level.
Despite buyers’ best efforts, sellers took advantage of the bearish market over the past 48 hours to break below the support and extend the bearish momentum. This saw AAVE briefly touch the $51 support before retracing to trade at $55.9, as of press time.
Furthermore, the lack of bullish strength was illustrated by the Relative Strength Index (RSI) dropping into the oversold zone. This showed the strong bearish dominance. Likewise, the Chaikin Money Flow’s (CMF) reading of -0.16 revealed significant capital outflows, hinting at capital preservation moves.
An extension of BTC’s bearish sentiment could see AAVE head toward $51 – $53 with such a move offering modest gains for sellers at the current price level.
Alternatively, a bullish close above $61 will invalidate the bearish thesis, although bulls will have to scale the bearish trendline for sustained gains.
Dipping Open Interest highlighted bearish bias
Realistic or not, here’s Aave’s market cap in BTC terms
The sharp drop in Open Interest (OI) between 17 August and 18 August showed the waning demand for AAVE in the futures market. A decline in price and open interest indicated a continuation of the bearish trend.
With on-chain metrics continuing to dip, this indicated more downside could be imminent for AAVE before a price reversal happens.
