AAVE Price Faces Potential Decline as Whale Activity Declines and Risky Pattern Emerges

The recent surge in Aave's price may be coming to an end, as indicators show a risky chart pattern is forming and whale accumulation has slowed down.

Key Takeaways

Aave (AAVE) price surged over 175% from its April low, reaching $326.
Total Value Locked (TVL) in Aave's ecosystem hit a record $41 billion.
Whale activity has diminished recently, showing no new purchases since mid-August.
Smart money investors have reduced holdings, indicating potential price correction.
A risky double-top chart pattern may lead to price drops, potentially targeting $190.

AAVE price could crash as whale activity fades, risky pattern forms

Aave's token has experienced remarkable growth, surging over 175% since its lowest point in April, peaking at $326. Despite its impressive performance and a significant increase in the Total Value Locked (TVL) in its ecosystem, emerging patterns suggest potential price corrections. Key metrics indicate declining whale activity and a shift in investor behavior that could lead to a price pullback.

Analysis of Aave's Recent Performance

The Aave token has surged significantly, peaking at $326 over the weekend, representing a rise of more than 175% from its lowest point in April 2023. Currently, it hovers close to its December 2024 highs, giving it a market capitalization of nearly $5 billion.

Aave has enjoyed a strong bull run in recent months, with a notable acceleration in network growth. Data from DeFiLlama shows that the total value locked (TVL) within its ecosystem has reached a record high of $41 billion, nearly double the amount it started with at the beginning of the year.

According to its official website, liquidity supplied on the Aave platform has soared to over $63 billion, surpassing many American banks. This significant growth has directly impacted monthly fee revenue, with TokenTerminal reporting fees of $80 million—an increase of 7.2% since July's $74.7 million and June's $50 million.

As a result of rising fee collections, Aave's assets have increased to $235 million, up from $176 million in April.

Signs of Potential Price Correction

Despite these impressive metrics, there are emerging signs that Aave's price could soon lose its momentum. Data from Nansen indicates that whales currently hold 183,116 AAVE tokens valued at over $59 million. Although these holdings increased by 15% in the past 30 days, whale activity has stagnated since August 14, when no new purchases were made.

Smart money investors, known for their buy-low, sell-high strategy, have also decreased their holdings from a high of 294,000 earlier this month to 293,000. This reduction could be a signal that they anticipate a price correction for AAVE.

Additionally, the number of tokens available on exchanges has risen to 5.42 million from a previous low of 5.4 million, suggesting investors are beginning to sell off their tokens.

Price Chart Analysis

A weekly chart analysis shows that AAVE has been trending upward in recent weeks, climbing to a high of $377 from an April low of $113. The token has remained above both the 50-week and 100-week Exponential Moving Averages, which is generally considered a bullish indicator.

However, there is an emerging risk that AAVE has formed a double-top pattern, with the neckline identified at $113.8. As long as AAVE remains below the double-top resistance level at $377, a price pullback appears likely. Such a correction could see AAVE dropping towards the 100-day moving average, potentially hitting $190.