After reaching $361 in the previous week, Aave [AAVE] has faced challenges in sustaining its upward trajectory. The cryptocurrency has seen a decline, dropping to as low as $272.
Currently, AAVE is being traded at $282, reflecting a 2.61% decrease on a daily basis. The coin has also shown declines on a weekly and monthly scale, with drops of 17.17% and 20.52% respectively.
Given the recent market conditions, many analysts are predicting further downsides. Well-known crypto market expert Ali Martinez has hinted at a potential drop to $203 based on a recent sell signal.
Reading the Market Sentiment
In his assessment, Martinez has noted that the TD Sequential Indicator has issued a sell signal for AAVE on weekly charts.
Interpreting this signal, Martinez suggests a potential slide to $264 or even down to $203. A sell signal typically indicates the exhaustion of the uptrend, paving the way for a possible downtrend.
If a significant number of sellers step into the market, a stronger downward pressure may emerge, leading to further decrease in price.
Insights from AAVE’s Data Trends
While Martinez’s analysis carries a bearish perspective, it is crucial to consider other market indicators as well.
The Relative Strength Index (RSI) for AAVE has plummeted to 41, maintaining a consistent decline post a bearish crossover. This drop confirms substantial selling pressure, implying that sellers currently hold the upper hand.
Similarly, the Advance Decline Ratio (ADR) has hit a monthly low of 0.31. A value below 1 indicates that AAVE is encountering more losses than gains in its market performance.
With successive lower lows, the coin is under intense downward pressure.
Further analysis reveals a significant decrease in AAVE’s network activity, as evidenced by a rising NVT Ratio, which has surged to 1124. This surge reflects an overvaluation of the coin relative to its transaction volume.
The negative price DAA Divergence further validates the declining network usage, signaling a potential correction to align with actual demand.
Moreover, AAVE appears to be oversupplied, suggesting a notable influx into exchanges. The stock to flow ratio has dropped to zero and remained stagnant for the past three days.
With an oversupply in circulation, the coin might face a decline due to heightened selling activities.
In brief, AAVE is currently under strong downward momentum, with sellers dictating market movements.
Under these circumstances, the coin is poised for further downtrends. If the selling pressure persists, AAVE could fall to $272, possibly dipping even lower to $246. However, a reversal in trends could lead to the coin reclaiming the $300 levels.