Aave [AAVE] recently broke below the $100 support level amidst a broader market decline, reaching a three-week low of $96. Currently, AAVE is trading at $97, marking a 7.7% decrease on the daily charts, with the market cap dropping by over $200 million.
This downward movement caused the altcoin to fall below its short-term Moving Averages (MA), specifically the 9- and 21-day MAs, indicating significant downward pressure.
AAVE Falls Below $100
As the overall crypto market retraced, AAVE market participants turned bearish and started exiting the market aggressively, further reinforcing the downward momentum.
The shift in sentiment was evident as the Bulls vs. Bears indicator transitioned from positive to negative after being in positive territory for over a month. This shift indicates that sellers have taken control of the market, pushing out buyers.
Additionally, exchange data mirrored this seller dominance, with 79k AAVE tokens flowing into exchanges compared to 74k flowing out, as per CryptoQuant data.
Consequently, the altcoin’s Netflow remained in the positive zone for the sixth consecutive day, indicating a strong seller presence in the market.
This led to the altcoin’s Exchange Supply Ratio rising to a monthly high of 0.137, signaling heightened selling activity. Such an increase in ESR typically reduces scarcity, thereby increasing the supply available for immediate sale.
Such exchange dynamics have historically preceded significant downward momentum for the asset, resulting in price declines.
Momentum Indicators Analysis
AAVE has witnessed robust downward momentum, breaching a crucial support level, with sellers surpassing buyers significantly. The altcoin’s Relative Strength Index (RSI) has plummeted deeper into bearish territory, reaching 34 at present.
With RSI nearing oversold levels, it indicates seller dominance in the market, with minimal buyer participation. Traditionally, such market conditions tend to enhance downward momentum, often resulting in lower prices.
Therefore, if sellers maintain control with minimal opposition, AAVE is likely to decline towards $92 before any potential recovery.
However, a cooling market with bulls reclaiming $100 could pave the way for a rebound. To signify a significant trend reversal, bulls must flip $100 and regain the 9- and 21-day MAs at $107 and $110, respectively.
Failure to do so may lead the altcoin into an extended bearish phase, potentially keeping it below $100.
Key Takeaways
- Aave experienced a 7.7% drop, breaching $100 and hitting a three-week low of $96.
- AAVE encountered substantial selling pressure, with bears dominating over bulls, heightening downside risks.
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