AAVE is attempting to recover after a heavily bearish performance in the last seven days, during which it tanked to pre-2021 lows. The cryptocurrency dipped as low as $65.8 a few hours ago as the bears extended their assault.
AAVE had recovered to $71.6 at the time of writing, a significant recovery from its current 24-hour low. The last time that AAVE traded within its current price range was in December 2020.
It has been heavily bearish in the last 7 days courtesy of the shaky and FUD-filled market conditions. Despite the slight recovery from the recent low, AAVE is still down by roughly 54% in the last seven days, and by 72% from its latest local top on 1 April.
Will AAVE maintain its bullish recovery or capitulate in favor of the bears?
AAVE’s price action is currently flashing multiple signs of upside. For example, it is currently within its descending support line tested multiple times since December last year. There is a significant possibility of a bullish bounce-back despite currently crossing below the support line.
Source: TradingView
AAVE’s RSI is currently deep in the oversold zone where buyers will likely start piling up. Healthy accumulation is bound to take place at current lows, but its MFI indicator has not yet registered an uptick. AAVE’s DMI still registers strong downward momentum and this translates to a potentially extended bearish performance.
AAVE’s price chart and indicators suggest that there is still significant uncertainty and this resonates with the prevailing sentiment in the crypto market. However, there is also significant probability that it might recover above $100 in the short-term. However, this is subject to sentiment change in favor of the bulls, and healthy accumulation at current lows.
AAVE’s on-chain metrics currently highlight favorable activity. For example, the number of active addresses have increased in the last few days. Exchange outflows increased notably in the last 2 days and they currently outweigh the exchange inflows.
Source: Glassnode
If we consider the oversold conditions, the bounce from support and exchange outflows, it is easy to see why one can conclude that AAVE currently is in a position to recover quickly. Note however, that we are still in a risk-on market. Another major selloff might take place before or during the weekend. AAVE is heavily discounted nonetheless, and is thus due for a rally.
