Despite the recent downturn in the market, Aave [AAVE] has emerged as one of the standout performers among altcoins. Nevertheless, the surge in price has triggered profit-taking activities, with Stani Kulechov, the founder and CEO of Aave, leading the pack of sellers.
According to data from LookOnChain, Kulechov has offloaded 55,596 AAVE tokens, equivalent to $6.67 million, since February. Subsequently, the founder’s AAVE holdings now amount to 243.9K coins, valued at over $32 million.
Is AAVE’s current valuation inflated?
Analysis by Kaito suggests that Aave has garnered significant attention on social media following a low of $75 in Q2. The spike in mindshare coincided with the price recovery of AAVE.
This surge in interest implies a strong market demand that could have contributed to an approximately 80% rebound from the Q2 lows.
Following this substantial recovery, investors who have held AAVE for three and six months have seen unrealized profits of 27% and 26%, respectively, based on the 90-day and 180-day MVRV ratios.
This metric also helps in evaluating whether a cryptocurrency is overvalued. Investors who have accrued significant unrealized profits within short and medium-term timeframes might be tempted to secure some gains.
Hence, at the current price point, AAVE might be somewhat overvalued, and there is a risk that late entrants could face significant losses if profit-taking intensifies.
Crucial Price Levels for AAVE
On the 12-hour price chart, AAVE’s recent surge encountered a short-term supply zone and a bearish order block (OB) around $140.
The presence of the supply zone further indicates recent profit-taking activities among medium-term holders, including Kulechov’s divestment.
Despite substantial social interest since late August, surpassing the $140 mark has proven to be a challenging task for AAVE.
If the selling pressure holds at $140, the immediate support levels at $118 and $109 could present attractive buying opportunities.
Nevertheless, AAVE still holds promise, buoyed by the growing interest in DeFi and solid backing from prominent crypto venture capitalists for its lending protocol.
As per Arthur Cheong, the founder and CEO of DeFiance Capital, AAVE stands to be the most valuable DeFi protocol.
‘Unpopular opinion: Aave should be the most valuable DeFi protocol.’