Since the start of the year, AAVE has shown strong growth in terms of market capitalization. Specifically, the protocol’s revenue has surged significantly.
Notably, AAVE’s native token also exhibited a similar trend in the previous year.
Exploring AAVE’s Blockchain Activity
A well-known crypto analyst, Milk Road, recently posted a tweet unveiling an intriguing development. According to the tweet, AAVE has generated a revenue of $500 million in the current year.
As a result, AAVE’s revenue surpasses that of other leading protocols, with Venus Protocol and Compound following closely behind.
Despite the substantial revenue growth, a decline in network activity was observed, as per CryptoCrypto’s analysis of IntoTheBlock’s data. For instance, the daily active addresses for AAVE, after reaching a peak in September, started to decrease. This decline also impacted the number of transactions, which can be linked to the drop in active addresses.
Moreover, the ratio of new addresses to dormant addresses with no recent transactions also saw a reduction, indicating a decrease in network usage.
How is the Token Price Performing?
After reviewing the protocol’s network activity, CryptoCrypto decided to analyze the token’s price performance. It was found that the token’s price surged by over 100% in the past year. However, recent months witnessed lower volatility levels, limiting potential profits for investors.
Subsequently, an examination of AAVE’s on-chain data was conducted to assess the outlook for Q4. Analysis revealed a bearish sentiment surrounding the token, evidenced by a decline in AAVE’s weighted sentiment.
The decrease in positive sentiment coincided with a rise in selling pressure. Data from Santiment indicated a sharp increase in AAVE’s supply on exchanges, while the off-exchange supply decreased, reflecting active selling by investors. Increased sell pressure typically leads to price corrections.
On a positive note, a close inspection of AAVE’s daily chart demonstrated a successful test of a critical support level near $135. This suggests the potential for a bullish trend reversal.
If a bullish reversal occurs, the token may rally to $170. Conversely, continued bearish dominance could push AAVE down to $118 in the near future.