AAVE: Is the $160 Support at Risk? Signs Point to Further Declines

AAVE has recently experienced a significant downturn, facing challenges that threaten the support level at $160. Investors are closely watching these developments as market sentiment shifts.

Key Takeaways

AAVE has suffered a four-day decline, dropping to a local low of $165 and currently trading at $166, down 10.17% on the day.
Large whale transactions have declined sharply, with a notable whale reporting a loss of $1.54 million.
Retail investors are also aggressively selling AAVE, leading to a negative Buy Sell Delta for three consecutive days.
The asset's technical indicators show a bearish crossover, suggesting potential further declines, with critical support at $160 at risk.

AAVE: Is the $160 Support at Risk? Signs Point to Further Declines

AAVE Under Pressure: Recent Performance

Since being rejected at the price point of $190 four days ago, AAVE has been under heavy selling pressure. It has seen a continuous decline, reaching a recent low of $165. As of this moment, AAVE is trading at $166, reflecting a 10.17% drop over the day and highlighting the ongoing bearish sentiment in the market.

AAVE Spot Average Order Size Source: CryptoQuant

Whale Activity: Significant Losses Recorded

As AAVE's price has dropped, so have the orders placed by large investors, known as whales. Recent data from CryptoQuant indicates a sharp decrease in the Spot Average Order Size, which has reached a weekly low.

One whale notable for its activity returned after a hiatus of 1.5 months and transferred 15,396 AAVE, valued at $2.57 million, to FalconX. Initially, this whale had received 20,396 AAVE worth $4.89 million from FalconX, selling 5,000 AAVE for $779,056. With the latest transaction, this whale has realized a loss of $1.54 million. The aggressive selling from whales during market downturns often reflects a lack of confidence and suggests they foresee further losses.

Retail Investors Join the Selling Wave

The pressure is not limited to whales; retail investors are also selling AAVE aggressively, leading to heightened selling activity across the market. According to Coinalyze, AAVE has recorded a negative Buy Sell Delta for three days straight.

In the past 24 hours, the asset experienced 165.26k in selling volume versus 140k in buying volume, resulting in a negative Delta of -25.2k. This trend indicates strong selling pressure from both institutional and retail investors.

AAVE Buy Sell Volume Source: Coinalyze

Moreover, transaction data from CryptoQuant shows a positive Exchange Netflow for the first time in four days, with a Netflow of 6.7k AAVE tokens. Increased deposits to exchanges typically heighten downward pressure on an asset, suggesting a looming decline in prices.

Is the $160 Support Level in Jeopardy?

According to AMBCrypto, the outlook for AAVE appears increasingly pessimistic amid this wave of selling from both whales and retail traders. AAVE has formed a short-term bearish crossover, with the 9-period Moving Average (MA) crossing below the 21-period MA, signaling intensified bearish sentiment in the market.

AAVE RSI & MA Source: TradingView

Furthermore, the Relative Strength Index (RSI) has also crossed into bearish territory, reinforcing concerns about a potential further decline. If selling activity persists, particularly from whales, AAVE risks breaking through the $160 support level, potentially dropping to $155. For a reversal in trend to occur, AAVE would need to close above both the 9- and 21-period MAs at around $178 to strengthen its position and enable a recovery to $189.

Concluding Remarks

As AAVE faces significant downward pressure from multiple fronts, market participants should remain vigilant. The ongoing selling from both whales and retail investors raises alarms about the security of the $160 support level.