AAVE sees TVL drop, but recovery possible if levels hold
The Essentials at a Glance
- AAVE is experiencing a decline in Total Value Locked (TVL), indicating capital outflow.
- However, technical indicators suggest a potential recovery.
- Long-term traders have suffered significant losses, while open interest has dropped sharply.
Decline in Total Value Locked (TVL) for AAVE
AAVE, one of the leading DeFi (Decentralized Finance) platforms, has seen a significant decline in Total Value Locked (TVL) over the past few days. TVL represents the total value of assets locked in a protocol and serves as an indicator of investor confidence and capital commitment. According to data from DeFiLlama, AAVE’s TVL has dropped to $11.941 billion USD. This development suggests that investors are increasingly withdrawing funds from the protocol.
Increase in Active Addresses – A Warning Sign?
Interestingly, the number of active addresses rose by 6.85% to over 1,020. This could indicate increased activity, although it appears to be driven primarily by sales. An increase in active addresses, combined with a declining TVL, is often a sign that investors are liquidating their positions, which could put additional pressure on the price.
Long-term Traders Under Pressure
Traders who bet on a continued uptrend for AAVE have faced significant losses in the past 24 hours. According to Coinglass, approximately $1.91 million USD was liquidated as many traders speculated on rising prices. Market sentiment has deteriorated significantly, which is also reflected in a 20.23% drop in open interest. Open interest measures the number of open positions and can serve as an indicator of overall market interest.
Technical Analysis: Hope for a Recovery?
Despite the negative market sentiment, there are signs that AAVE may be on the verge of a recovery. Technical indicators show that the price has reached a key resistance point where a horizontal and diagonal resistance line intersect. If this resistance holds, AAVE could rise to as much as $180.74 USD. However, if the price falls below this resistance, there is a risk that AAVE could drop to $119 USD.
Our Assessment
AAVE is currently at a critical juncture. The decline in TVL and losses for long-term traders point to ongoing weakness. At the same time, technical indicators suggest that a recovery is possible if key resistance levels hold. Traders should closely monitor these levels to respond to market movements in a timely manner.
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