- Aave enjoys strong network activity as the market experiences a bullish frenzy.
- AAVE bears may get a chance to take the wheel as the bulls take a break following an intense week.
Now that the markets have been recovering after previously experiencing a low liquidity phase, DeFi demand is resuming. Aave [AAVE] has been benefitting especially in terms of utility and this is promising for its native token AAVE.
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Recent market analysis revealed a surge in Aave’s network activity in the last two days. This didn’t exactly come as a surprise considering the soaring demand for cryptocurrencies as observed in the bullish outcome during the last few days.
The observation reflected a surge in the number of transactions which stood at its highest levels observed in the last two weeks.
Using this tool to monitor tokens is really easy.
And I discovered there’s been a significant surge on the number of transactions on the AAVE blockchain in just 2 days.
Activities went up from 1.2k to 2.9k within the last two days.
This increment in Transaction number… pic.twitter.com/NDjnbS1yVZ
— Web3 Wonder (🐳’👑) ₿ (@Onlywondergirl) October 24, 2023
The fact that Aave was experiencing strong network activity should technically fuel demand for AAVE. That appears to have been the case in the last few days given its robust rally.
Furthermore, last week we also observed a significant probability of AAVE breaking out of its wedge pattern. Fast forward to the present and that prediction was a bit too accurate.
Why a retracement could be on the cards
AAVE exchanged hands at $84.65 at the time of writing. This price point was noteworthy because it represented a slight pullback from its recent monthly high. The retracement occurred after the price retested a resistance level previously observed in July.
Source: TradingView
Additionally, the resistance retest suggested a significant probability that the price might extend its downside. This was further supported by the fact that the price recently pushed deep into overbought territory on both the Relative Strength Index (RSI) and the Money Flow Index (MFI). Furthermore, on-chain data also supported those expectations.
Interestingly, the latest pullback may have just saved some short sellers. This was because the pullback occurred just as the price was about to enter a peak liquidation zone. A bit more upside and short sellers would have experienced maximum pain above the $91 price level.
Source: Hyblock
However, the whales could be the saving grace for short sellers. This was because on-chain data also indicated that there was a considerable amount of profit-taking from the whales. Most of the outflows observed were from addresses holding between 10,000 and 100,000 AAVE coins (green).
Source: Santiment
How many are 1,10,100 AAVEs worth today
On the other hand, there was still a significant amount of accumulation coming from addresses with over 100,000 coins. This may explain why the pullback has been limited for now. In the meantime, it was worth considering the possibility that the market inclined in favor of the bulls. Hence, the possibility that AAVE could extend its rally.