Market Sentiment for Crypto Continues to Remain Negative
Aave is a decentralized lending platform that allows users to lend, borrow, and earn interest on crypto assets without the involvement of intermediaries. AAVE token holders have several privileges, including voting on changes to the platform’s rules and policies, and borrowers can take out loans denominated in AAVE without incurring fees. As with other decentralized lending systems on Ethereum, Aave borrowers are required to provide collateral before borrowing.
This project, which launched in 2017, has grown to become a significant part of the Decentralized Finance (DeFi) movement. Many analysts believe Aave has a bright future, citing its limited supply, which is even more scarce than Bitcoin’s. However, AAVE’s upside potential may remain constrained in Q4.
AAVE, along with most major cryptocurrencies, is under pressure following the U.S. central bank’s 75 basis point interest rate hike and its indication that rate cuts won’t occur until 2024. Federal Reserve Vice Chair Lael Brainard emphasized that monetary policy is likely to remain restrictive until inflation shows clear signs of slowing amidst “very high” price pressures.
Investors are avoiding riskier assets, and market reactions are becoming hypersensitive to any comments from the Federal Reserve. Brandon Pizzurro, director of public investments at GuideStone Capital Management, commented:
“St Louis Fed President Bullard reportedly stated that the U.S. has a serious inflation problem, and the central bank’s credibility would be at risk if it eased the 2% inflation target. This means more pain ahead for equities and cryptocurrencies, and the worst is yet to come.”
Bearish traders holding AAVE positions may feel confident that the downtrend will persist unless the cryptocurrency shows signs of a rebound. AAVE’s price is closely tied to Bitcoin, and if Bitcoin falls below the $18,000 support level, AAVE could also experience new lows.
AAVE Price Technical Analysis
Aave (AAVE) has dropped from $96.95 to $70.66 since September 12, 2022, and currently sits at $73.17. Given the bearish market structure and multiple resistance levels near $100, a bearish breakout below $70 appears to be a more likely outcome. This could trigger another decline toward the $65 region or even lower.
In the chart below, I’ve marked the trendline. As long as AAVE’s price remains below this trendline, a trend reversal cannot be confirmed, and the cryptocurrency remains in the SELL-ZONE.
Critical Support and Resistance Levels for AAVE
The fundamentals of AAVE are closely tied to the broader cryptocurrency market, and the token may struggle to stay above the $70 mark in the near future. In this chart (from January 2022 onward), I’ve highlighted important support and resistance levels that traders can use to predict price movements. AAVE is still in a “bearish phase,” but if the price rises above $100, it could signal a reversal of the negative trend, with the next target around $120. Currently, the support level is $70, and if AAVE breaks this level, it will likely trigger a “SELL” signal, paving the way to $65. If the price falls below $60, the next target may be around $50, which is a strong support zone.
Factors Supporting a Potential AAVE Price Increase
The fourth quarter of 2022 is likely to remain difficult for AAVE, and the outlook for risk appetite in the short term is not promising. AAVE trading volumes have decreased over the last few weeks, but if the price surpasses the resistance level of $100, the next potential target is around $120. Traders should also remember that AAVE’s price is correlated with Bitcoin’s movements, and if Bitcoin’s price climbs above $22,000, AAVE could also rise to a higher price level.
Signals of Further Decline for AAVE
September has been a challenging month for the cryptocurrency market, with AAVE closing the month on a negative note amid a decrease in market interest and an increasingly difficult macroeconomic environment. AAVE’s potential for growth in Q4 remains limited, particularly after comments from the Federal Reserve indicating that rate cuts are unlikely until 2024.
Economists have warned that a global recession may be imminent, and many analysts believe AAVE’s price will continue to fall. Currently priced above $70, if AAVE falls below $60, a crucial support level, the next potential target could be around $55 or even $50.
Price Projections for AAVE from Analysts and Experts
September was a tough month for AAVE and the broader cryptocurrency market, as investor interest waned. Brandon Pizzurro, director of public investments at GuideStone Capital Management, believes that the U.S. central bank’s aggressive monetary policies will lead to further pain for both equities and cryptocurrencies. According to Pizzurro, the worst is yet to come, and new lows are likely for the cryptocurrency market in the coming weeks. However, investor Robert Kiyosaki, author of “Rich Dad, Poor Dad,” sees the current crypto market as offering opportunities for savvy investors.
