During the recent 48 hours, Aave [AAVE] has witnessed a drop from a peak of $361 to $335, attributed to significant holders opting for profit-booking strategies to maximize gains from the New Year’s surge.
SpotOnChain reported a noteworthy transaction where a large investor offloaded 19,001 Aave tokens valued at $6.5 million on the Binance platform. This move resulted in a substantial profit of $4.93 million for the seller.
This marked the first sell-off by this particular whale, who started accumulating this altcoin back in 2024. In June, the investor had withdrawn 89,109 tokens amounting to $7.36 million. Despite the recent sale, the whale still possesses 70,108 AAVE tokens valued at $23.65 million.
When whales initiate such selling activities, it can signal either a lack of confidence in the market’s future or a strategic move to capitalize on profits following a surge in prices.
Such selling actions carry the risk of creating downward pressure on the market, potentially leading other investors to perceive the sale as a bearish signal, prompting weaker hands to follow suit and sell their holdings.
How has this affected Aave’s price trends?
Unsurprisingly, the increased selling activity has had a detrimental impact on AAVE’s price trends. As of the latest update, AAVE was trading at $339.
This represented a 1.71% decline in the daily trading charts. Prior to the decline, the altcoin had been on an upward trajectory, recording a monthly gain of 19.34%.
Despite the dip in price attributed to the whale’s sell-off, the prevailing market sentiment appears bearish, anticipating further price drops.
Signs of this bearish sentiment are evident in the Relative Strength Index (RSI), which has shown a bearish crossover in the past 24 hours, indicating a dominance of sellers in the market.
Furthermore, the Chaikin Money Flow (CMF) is currently negative at -0.02, confirming considerable selling pressure.
Delving deeper, the decline in on-chain outflow volume reflects this bearish trend. According to data from IntoTheBlock, the outflow volume has decreased from 59.22k to 33.19k.
This suggests that more investors are opting to retain their AAVE tokens on exchange platforms.
Moreover, the rising netflows, surging from -22.02k to 4.57k, indicate a shift towards transferring tokens to exchanges rather than accumulating them. This pattern hints at a bearish outlook among investors, anticipating a further decline in prices.
Lastly, AAVE’s NVT Ratio linked to transaction volume has spiked significantly to 323, hinting at a probable market correction. This surge implies a drop in the network’s active users relative to its market capitalization.
Historically, an elevated NVT ratio often precedes market corrections, signifying a detachment between prices and fundamental market factors.
In essence, although whale sell-offs intensify selling pressure, they are not occurring in isolation, given the prevailing negative sentiment among investors, albeit in the short term.
If these market conditions persist, AAVE might decrease to $324. A potential reversal scenario could see the altcoin reclaiming $354 if buying momentum resurfaces in the market.