AAVE Price Faces Potential Decline Despite Horizon's Growth

Aave’s price recently fell into a bear market, having dropped over 21% from its peak last week, even with positive developments surrounding its new real-world asset (RWA) tokenization platform.

Key Takeaways

Aave's price has dropped over 21%, reaching $300, its lowest since August 22.
The total value locked in Aave's network increased by 22% over the past month, now at approximately $40 billion.
Aave's Horizon product, which connects traditional and decentralized finance, allows institutional investors to use tokenized RWA assets as collateral for stablecoin loans.
Despite positive developments, the price decline may continue, with potential support at $280 and further adjustments possible down to $245.

AAVE price at risk of more downside despite Horizon growth

Aave, a leading player in decentralized finance (DeFi), has seen its price decline significantly while its total value locked (TVL) continues to rise. This situation stems from a mixture of market dynamics and investor reactions to recent news about Aave's Horizon product.

Aave's Current Performance

Aave has decreased to $300, mirroring the price action of Bitcoin and other altcoins during a market downturn. As the biggest player in the DeFi space, Aave has managed to maintain a healthy total value locked, which recently climbed by 22% in the last month and is now around $40 billion. Additionally, fees generated over a week reached $21.2 million.

The growth has been partly fueled by the launch of Aave's Horizon product, designed to facilitate a merger between traditional finance and decentralized finance. With Horizon, institutional investors can now borrow stablecoins using tokenized RWA assets as collateral, making it easier for qualified institutions to access loans secured by these assets.

Momentum in the Horizon Product

Data suggests that the Horizon product is off to a strong start, with total available funds increasing to $50 million. Approximately $6.2 million in tokens have already been borrowed by users. Ripple USD leads in supply on the platform, with more than $26.3 million in assets, followed by USD Coin at $8 million. Other significant participants include the Janus Henderson Anemoy Treasury Fund with over $2.08 million in assets.

Market Trends Affecting Aave's Price

Despite these positive developments, Aave's token price slid from a peak of $385.32 last week to its current position of $300, likely as some investors reacted to the news of Horizon’s launch by selling off their holdings.

Currently, Aave’s price has positioned itself within the middle of an ascending channel, finding support near the 50-day moving average. However, given the current market conditions, the token may continue to face downward pressure, with sellers potentially targeting a lower support level at $280. If the price breaks below this point, it could lead to a further decline down to around $245, which was its lowest point on August 30.

In conclusion, while Aave is making strides in the DeFi space, the ongoing market sentiment suggests that its price may encounter further challenges before a bullish recovery can take place.