AAVE relies on ETH whales, but is it enough for a major rally this week

AAVE relies on ETH whales, but is it enough for a major rally this week

  • AAVE shows renewed interest in whales
  • However, lack of demand can mitigate the condition of AAVE in the long run

During the first half of November, AAVE crashed to price levels below $60. Its performance last week indicated weak demand for sufficient bullish momentum for a significant rally. However, this observation may be about to change as whales renew their interest in AAVE.

Read AAVE Price Prediction 2023-2024

According to a recent analysis by WhaleStats, AAVE was currently among the top 10 tokens bought by top ETH whales. This means that the demand for AAVE has seen a considerable increase in the last hours before press time. But can this demand be a sufficient trigger for the recovery rally this week?

The WhaleStats sighting was consistent with the number of whale transactions. In the past 24 hours, there have been at least two transactions worth more than $1 million, which has been accompanied by an increase in AAVE V2 deposits. It was the first time that deposits had recorded such a significant rise in the past four days.

AAVE Chain Activity

Source: Santiment

These observations may indicate an increase in on-chain activity. Interestingly, this came after a sharp rise in the weighted sentiment metric. Thus, the market sentiment was shifting in favor of the bulls, which resulted in some bullish momentum over the past 24 hours.

Taking into account the evolution of AAVE prices

The price briefly broke above the $60 price level, but the short-term price action was notably struggling to stay above that price range.

AAVE courses

Source: Trading View

The above observations suggest a lack of meaningful demand to accompany reported whale activity. Although there has been an increase in AAVE volume over the past 24 hours, there has been virtually no change in the number of active addresses. This confirmed that the volume was largely controlled by whale activity.

AAVE volume and daily active addresses

Source: Santiment

The lack of a substantial increase in daily active addresses suggests weak demand from the retail segment. Why was that a critical observation, you might wonder?

Well, that may explain why AAVE was struggling to bounce back. The lack of retail demand to contribute to the accumulation of whales may explain the weak bullish momentum.

A look at the supply distribution of AAVE may also explain the sideways price movement over the past few days. The best addresses have tested the market in recent days through a series of accumulations and distributions.

AAVE supply distribution

Source: Santiment

A closer examination of the two main address categories reveals a game of accumulation and distribution. Incoming selling pressure negated any existing demand. Consequently, the last 24 hours have been characterized by relative inactivity of the main addresses.

Although current market conditions underscore the lack of adequate demand, this could also be the start of the next price wave. Thus, it remains to be seen whether the current position and the observation above will produce more bullish volumes for the early breakout of AAVE.

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