Aave [AAVE] Retains Bearish Promise Despite a Good Run in the DeFi Sector

Aave [AAVE] was in a good position in the DeFi sector and could handle decentralized liquidations effectively. This earned a $6 million revenue overnight.

Aave [AAVE] was positioned well in the DeFi sector and managed decentralized liquidations efficiently. This fetched a revenue of $6 million overnight.

The protocol also achieved milestones in July, like the proposed introduction of a “fee switch.”

On the price front, AAVE seemed to be holding strong despite market-wide losses earlier this month. This notion was thrown out of the window during the sell-off on Monday, 5 August.

What does the token’s prospect look like moving forward?

A bearish promise remained for AAVE. Source: AAVE/USDT on TradingView

The market structure for AAVE on the 1-day chart remained bearish. It fell to the 78.6% Fibonacci retracement level at $78.71 and bounced to the $106 level.

However, it failed to make a new high, and the rejection set a lower high instead.

The daily RSI has moved around the neutral 50 mark for the past few days, indicating that momentum did not favor the bulls yet.

The OBV has trended up since 5 August, but the CMF dropped to -0.02, signaling heavy capital flow out of the market.

AAVE metrics hinted at volatility and distributionSource: Santiment

The MVRV ratio dropped from almost 30% to -2%, indicating that short-term holders were at a profit before the price crashed below $100. During the price drop, the dormant circulation saw an uptick.

Together, it suggested that holders cashed out and probably took profits. This notion was backed by the mean coin age (MCA) also falling, which indicated an AAVE distribution.

For buyers to be indicated accumulating the token, the MCA would need to trend higher.

The liquidation heatmap highlighted a short-term target at $108.5, and a much stronger liquidity pool at $118-$120. This could serve as a near-term target for the AAVE token before a pullback.

Realistic or not, here’s AAVE’s market cap in BTC’s terms

Overall, the show of relative strength against Bitcoin [BTC] was quickly snuffed out, which did not bode well for investor sentiment.

However, the protocol’s performance during this network stress period was positive and could be reflected in AAVE prices once the market sentiment begins to shift.

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