Aerodrome Finance (AERO) has recorded one of its strongest gains in recent weeks, with assets up 28% since the start of the year.
Its financials show that the protocol has held up well, as weekly fees generated $1.78 million and incentives for token holders reached $14.73 million, both fueling the asset’s broader growth. However, concerns are growing, with downward momentum that could weigh on overall performance.
AERO momentum turns bearish on the daily chart
AERO has entered a bearish phase on its daily chart, a change which suggests potential capital outflows in the coming days.
At press time, the Moving Average Convergence Divergence (MACD) reinforced this trend, signaling a likely bearish reversal in the coming days as the blue MACD line crossed below the orange signal line. Crossovers of this type often preceded declines once they took shape.
This corresponds to the fact that the Bull Bear Power indicator turns into a red histogram bar after about 15 bars of bullish dominance. The move into negative territory suggests increasing selling pressure on the market.
The chart also indicates two demand areas where AERO could find balance. The former is between $0.49 and $0.47, while the lower zone is from $0.44 to $0.42. Either could give the asset some stability in the event of a decline.
Perpetual traders remain long under pressure
Despite the downward pressure on the market, the average funding rate remained positive at around 0.0059%, a sign that long positions slightly dominate capital in the perpetual market.
A bias toward long positions generally reflects the trader’s belief that an asset will rebound in the short term, promising higher returns on the capital committed to the trade.
This accumulation of long positions follows significant capital outflows over the past day. Open interest, which measures active capital in the market, fell 12% to $56 million.
This decline confirms that many traders closed their positions during the period, largely due to volatility concerns, even though funding rates show that remaining capital is still long.
Liquidation Levels Keep AERO Downside Risk High
A reading of the liquidation chart shows that AERO’s chances of a further decline remain high. Much of the pressure comes from cumulative liquidation leverage built up at levels below the current price.
The greater the cumulative leverage, the stronger the downward pull, especially when momentum is already leaving the market.
This leverage thickens further down the price range, strengthening the downward pull. With sales momentum already high, the pressure could intensify.
Final summary
- AERO is up 28% so far this year, with healthy protocol fees and token incentives behind the ride, but momentum is starting to cool.
- Traders always bet on upside potential even if money leaves the market, a split that often appears just before a pullback.
