Key takeaways
Has the Aave Token Buyback Program Helped Build Market Confidence?
Although there was initially a positive reaction on the price charts, the subsequent range formation reduced the extent to which the bulls could push prices higher, and the bears regained control.
What is the evidence supporting a bearish outlook for AAVE?
The increase in takers’ selling volume over the past few weeks and the breakout from the lows of the range showed that the bulls were too weak to defend the psychological $200 level now.
Aave (AAVE), a leading DeFi protocol, was recently in the news after approving a $50 million buyback program.
The initiative aimed to buy back up to $1.75 million worth of AAVE per week, depending on the protocol’s revenue and other factors.
Since the buyback pilot launched in May, 94 million tokens worth over $22 million have been purchased. This deflationary mechanism, combined with general market strength, saw Aave token prices rise to $385 in August.
Since then, the market has been facing weakness.
Bitcoin’s (BTC) most recent fall below key support at $108,000 on November 3 saw Aave prices fall. At the time of writing, the psychological $200 level is being contested by both bulls and bears, but one side has the upper hand.
Aave prices drop another 15%
Source: CoinGlass
CoinGlass taker buy/sell volume showed that 24-hour AAVE volume has rarely been dominant in terms of buying over the past month. This means that the bulls did not have the strength to push prices higher due to overwhelming selling pressure.
At the time of writing, the Long/Short ratio was 0.918, showing that takers had higher sales volume. This implied that prices were poised to fall further in the short term.
The distribution of the range confirms a bearish bias
Source: AAVE/USDT on TradingView
On the daily chart, the bearish trend has persisted for more than a month. AAVE continues to post lower highs and lower lows, aligning with the bearish crossover between its 20-day and 50-day moving averages.
More importantly, price action since May revealed a range formation (in white) between $221 and $336.
Recent market volatility saw AAVE fall below the low of the range, and the $210 to $225 area was now a severe resistance zone.
As things stand, the price is expected to fall further. The next support levels to watch are $170 and $141.
Disclaimer: The information presented does not constitute financial, investment, business or other advice and represents the opinion of the author only.
