Aave (AAVE) broke through the $100 support level amid a broader market skid and fell to a three-week low of $96. In fact, at press time, AAVE was trading at $97, down 7.7% on the daily charts, while the market cap fell by over $200 million.
In doing so, the altcoin fell below its short-term moving averages (MA), the 9-day and 21-day MA, reflecting strong downward pressure.
AAVE falls below $100
As the crypto market retreated, AAVE market participants turned bearish and began exiting the market aggressively, further strengthening the bearish momentum.
In fact, the Bulls vs Bears indicator has turned negative after being positive for over a month. When this measure becomes negative, it suggests that sellers have dominated the market and displaced buyers.
Moreover, exchange activities echoed this dominance of sellers. According to CryptoQuant data, 79,000 AAVE tokens were inbound on exchanges, compared to 74,000 outflows.
Thus, the altcoin’s Netflow extended its hold in the positive zone for the sixth day, suggesting that sellers have exercised strong dominance in the market.
As a result, the altcoin’s exchange supply ratio reached a monthly high of 0.137 at the time of writing, indicating increased selling activity. Often, such an increase in ESR reduces scarcity, thereby increasing the supply available for immediate sale.
Such a configuration on the stock exchanges preceded a strong downward momentum in the asset, leading to a fall in prices.
What the momentum indicators suggest
AAVE saw strong downward momentum and broke through a key support level, with sellers significantly outpacing buyers. Since then, the altcoin’s relative strength index (RSI) has fallen deeper into bearish territory, dropping to 34 at press time.
With the RSI near oversold territory, this suggests that sellers are in control of the market, while buyers have largely pulled back. Traditionally, these market conditions have reinforced downward momentum, typically leading to lower prices.
Therefore, if sellers continue to flood the market with little resistance, AAVE is likely to slide towards $92 before attempting further upside.
However, if the market cools and the bulls reclaim $100, the altcoin could set the stage for a rebound. But for a significant trend reversal, the bulls need to return $100 and reclaim the 9-day and 21-day MAs at $107 and $110, respectively.
Otherwise, the altcoin will enter a long bearish streak, with a probability of remaining below $100.
Final summary
- Aave fell 7.7%, surpassing $100 and falling to a three-week low of $96.
- AAVE faced intense selling pressure as bears outpaced bulls, reinforcing downside risk.
