AAVEBitcoinIndustry AnalysisNewsPrice Prediction

Will AAVE Reach $130 Before January End?

2 Mins read

Aave is a DeFi platform for borrowing and lending cryptocurrencies. It uses a liquidity pool to provide loans to users. Currently, the AAVE token is trading on an uptrend after the October month of last year.

Aave and Its Working

Aave’s pool of crypto enables the code to pull out funds for loans at scale and on demand. The automation of transactions through smart contracts ensures quick lending and borrowing, but it also means that failure to pay back the loan on time could result in the liquidation of assets without any room for negotiation or extension.

Aave accepts dozens of assets from users, including stablecoins like USDT or USDC, and tokens such as BAT and MANA, with varying annual rates of return depending on the asset, blockchain, supply and demand, and the version of Aave being used. 

Currently, there are three versions of the protocol: Aave v1, v2, and v3, each with network upgrades.

According to DeFi Llama, Aave v2 is currently the largest public lending market with $5.29 Billion in TVL. Aave v3 has $1.47 Billion in TVL. Aave Arc, a permissioned DeFi lending protocol used by financial institutions such as Binance and Coinbase, is the largest market for Aave.

Aave is known for popularizing “flash loans,” which are immediate crypto loans that require no collateral, provided they can be repaid in the same transaction. Flash loans gained notoriety in the early 2020s when some coders used them to overload other DeFi protocols’ systems. 

Flash loans could lower the token price temporarily by manipulating the funds’ ratio in liquidity pools, allowing fraudsters to purchase tokens for cheap and drain funds from the protocol.

Users can stake the AAVE token in Aave’s Safety Module, a large pool of reserves that the protocol can use if it falls into debt. The protocol offers returns of up to 9.1% per year for staking AAVE in this manner, but the risk is that the protocol may use the tokens to protect itself.

Technical Analysis and AAVE Token Price Prediction

AAVE/USDT chart by TradingView (Daily time frame)

Since mid-October, the price of AAVE tokens has been showing a steady increase and reached $129 by the end of last year. The current resistance level for the AAVE price is at $117, whereas the immediate support level is also at $87.9. If the bullish investors manage to overcome the current resistance, their next target could be $144.

Despite the efforts of bulls to regain support from the immediate level, recent trading sessions have indicated a weak trend. 

The RSI level, which has decreased from 62 to 45, confirms this bearish trend. The recent falling trend can be attributed to all the noise regarding Bitcoin ETF approval.

This suggests that the hold of bulls on the AAVE price is weakening as they are now at the 50-day EMA, which is at $99.7. However, as long as the current support remains intact, the price prediction for the AAVE token remains bullish

Conclusion

Aave crypto pool enables quick lending and borrowing, but failure to pay back the loan on time could result in asset liquidation. Users can stake AAVE token in the Safety Module to avoid debt. The hold of bulls on AAVE price is weakening as it’s at the 50-day EMA of $99.7.

Technical Levels

  • Support Levels: $87.9 and $69.13
  • Resistance Levels: $117 and $144

Source

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About author
Harry is a crypto enthusiast and experienced trader with a track record of success. With a deep understanding of blockchain technology, he has analyzed market trends and identified profitable opportunities, resulting in impressive returns. Harry 's expertise lies in developing effective trading strategies that leverage the potential of cryptocurrencies. Through his articles, guides, and educational resources, he shares his insights and knowledge, helping individuals make informed trading decisions. With a keen eye for market patterns, Harry has navigated the volatile crypto landscape with confidence. Stay tuned for valuable perspectives and expert advice from Harry as he contributes to the Ailtra platform.
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