Despite being a significant player in the market previously, Aave [AAVE] is currently facing challenges in gaining traction. The token has seen a decline of 14.01% over the past week, with an additional 11.89% drop in the last 24 hours.
This downward trend is expected to persist. According to an analysis by CryptoCrypto, AAVE is currently lagging, and further decreases are anticipated before any signs of recovery.
AAVE Seeks New Support Area During Downtrend
The coin is currently on a downward trajectory, with a significant decline expected to continue until it finds a level with enough liquidity to stabilize or alter the market’s direction.
At present, the potential support zone is estimated to range between $135.34 and $116.21, as indicated on the chart.
If this support level proves effective, AAVE could potentially rally back towards its previous peak, aiming for the $200 threshold. Positive market momentum could further propel the asset towards higher price levels.
Retail Traders Impact AAVE Market Decline
The recent decrease in AAVE’s market value is primarily attributed to retail traders actively divesting their holdings in the asset.
Data from IntoTheBlock shows a significant surge in the number of active addresses in the last 24 hours, reaching 1,220 at the time of analysis.
The notable increase in active addresses, combined with the prolonged decline in the market, indicates a prevailing selling sentiment among market participants.
Conversely, significant holders, known as “whales,” have maintained a neutral position. The volume of large transactions has notably decreased, dropping from 334 on November 12 to 126 currently.
Should AAVE reach a price level deemed favorable by these major investors, whale activity may change, especially within a support zone that could witness increased buying.
Traders Transition to Long-Term Holding Strategies
Further examination reveals the prevailing bullish market sentiment towards AAVE, as spot traders are increasingly opting to move their holdings off exchanges for long-term safekeeping.
Exchange Netflow data from IntoTheBlock indicates that 22.09 thousand AAVE tokens were withdrawn from exchanges in the last 24 hours, and 67.46 thousand over the past 7 days.
This trend of AAVE leaving exchanges diminishes the available circulating supply for immediate sale, supporting demand and signaling an overall optimistic outlook for the asset.