- Aave struggles under intensifying bearish grip following rejection at the 50 SMA.
- On-chain analysis reveals the lack of formidable support, hence the possibility of further breakdown.
Aave's downtrend has been unstoppable since the August high of $0.9. Declines also followed the confines of a descending parallel channel. The downside support at $0.4 helped slow down the bearish momentum, culminating in gains above the channel's middle boundary. While the hurdle at $0.5 has been brought down, LEND is yet to correct the adverse price action, for gains past $1.
At the time of writing, the decentralized finance (DeFi) token is trading at $0.51. Generally, the dominant momentum is bearish, hence the need to hunt for a robust support area. It has become apparent that upward price action will not happen without challenges. Meanwhile, holding above $0.5 remains the bulls' priority as it could save them from a trip downstream.
Aave plans to bring DeFi to institutional investors
Aave announced on Monday that it had raised at least $25 million from strategic investors including, Standard Crypto, Blockchain.com, and Blockchain capital. Aave plans to use the funds to bring DeFi closer to institutional investors. The platform accepts deposits from users to provide liquidity. The liquidity providers earn interest on their deposits while other users take collateralized loans. This new funding will work as a supplement to the $24 million raised in a series of token sales since Aave's launch in 2017.
Aave's recovery hits a wall at $0.5
Aave's recent recovery from support at $0.4 hit a snag at the 50 Simple Moving Average in the 12-hour timeframe. The supply at this zone is intensifying the bearish pressure on LEND. Upward price action is unlikely to resume in the near term based on the horizontally moving Relative Strength Index (RSI). It is also essential to watch the RSI because a drop under the midline will shine a light on increasing sell orders.
LEND/USD 2-hour chart
Short term support is envisaged at the 200 SMA in the same 12-hour range. However, if broken, LEND might drop further and retest the anchor at $0.4. Simultaneously, extended losses will seek refuge at the descending parallel channel support, $0.35 and $0.25 levels, respectively.
IntoTheBlock's IOMAP model reveals intense resistance above the current Aave price. It is doubtful that buyers will penetrate the seller congestion to continue with the uptrend towards $0.6. The most robust resistance zone is illustrated between $0.52 and $0.53. Here, 374 addresses bought roughly 546 million LEND.
Aave IOMAP chart
On the downside, the lack of vital support areas means that the path with the least hurdles is downwards. However, buyers will try holding onto the initial demand zone at $0.49 - $0.50. Previously, 828 addresses purchased approximately 27.6 million LEND.
Subsequently, the "Daily New Addresses" metric brings to light a progressive decline in the number of new addresses joining the network. Since October 3 peak at 516, new addresses joining Aave have reduced significantly to 125. The downward trend in network growth is a red flag for LEND price in the near future. A sustained drop in network progression indicates eventual deterioration of the token value.
Aave New Addresses chart
Looking at the other side of the fence
It is worth mentioning that the buyers are not entirely sabotaged. If they can pull the price above the 50 SMA, then Aave will resume the uptrend. The action above the descending parallel channel and the 100 SMA could open the door for gains eyeing $0.6 and $0.9, respectively.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Bitcoin Price Forecast: Analysts anticipate increased volatility as the US presidential election looms
Bitcoin price teased its all-time high of $73,777 last week but declined to trade below $69,000 on Monday. Analysts suggest that market volatility is expected to rise as the US presidential election approaches.
Litecoin poised for double-digit decline after breaking ascending trendline
Litecoin breaks and closes below an ascending trendline, signaling a change in market structure. On-chain metrics paint a bearish picture, as LTC’s dormant wallets are active, and the NPL indicator shows a negative spike.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP decline ahead of US elections
Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) all faced resistance at crucial levels ahead of the US Elections, leading to a price decline. As of Monday, they neared key support levels, and a firm close below these marks could signal further declines.
21Shares files S-1 for XRP ETF amid ongoing tension between Ripple and SEC
21Shares filed an S-1 registration with the Securities and Exchange Commission (SEC) on Friday for an XRP exchange-traded fund (ETF). While the chance of approval is slim with the current SEC administration, the landscape could change after the upcoming elections.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.