Aave partners with Balancer while whales send $24 million worth of AAVE to exchanges

Aave scored a new partnership that is set to improve capital efficiencies in its lending protocol. Regardless, it seems like AAVE price is bound for a downswing as selling pressure mounts behind it.

Joining forces to improve the lending protocol

Aave announced a new partnership with Balancer to help build the first Balancer V2 Asset Manager. The idea behind it is to create a tool that puts idle tokens in liquidity pools to use.

More often than not, tokens deposited in Automated Market Makers (AMM) like Balancer, Compound, and Sushi are all generating yield. Still, the tokens are essentially inert, except when they are providing swap liquidity.

The new Asset Manager will take idle tokens and invest in Aave’s diverse lending platform to solve this issue. The vaults will have a buffer amount in them to facilitate any swap trades on Balancer. When this amount reaches a critical level, the Asset Manager will come into effect.

By replenishing the cash amount of that token by redeeming a portion of the invested tokens on Aave and sending them back to the Balancer vault to prevent swaps from failing. The Asset Manager also increases the invested amount of the token that’s becoming more abundant in the pool by sending some more of it to Aave to maximize its yield.

Balancer V2 is a new way to create and discover synergies between both protocols by increasing capital efficiency and allowing liquidity providers to earn additional rewards. Essentially, it will open up new possibilities for Aave stakers with the AAVE/ETH Safety Incentive pool.

AAVE price sits on eggshells

Aave price seems to be void of buyers, which has resulted in a 40% drop in the last two weeks. The substantial decline in its market value led to the formation of a series of lower highs and lower lows, creating a descending parallel channel along the way. 

A breakout from this technical pattern could go either way, but in Aave’s case, the price looks primed for a downswing as the channel’s middle line has rejected it. 

Supporting this bearish scenario is the death cross between the 50 and 100 six-hour moving average (MA). A continuation of the downward pressure could result in further losses. Regardless, only a 6-hour candlestick close below the $290 support level will confirm a bearish breakout. 

If this were to happen, AAVE price could drop anywhere between 30% to 35% to the next support barrier at $195.

AAVE/USDT 6-hour chart

When looking at the number of tokens that have been flooding exchanges lately, the bearish thesis holds. Two AAVE transactions worth $848,000 and $550,000 were sent to known exchange addresses in the past 24 hours.

Additionally, roughly 68,000 AAVE worth $24 million were deposited to exchanges. This development is a bearish sign and shows that investors are ready to book profits at the current price levels.

AAVE Exchange Inflow

While the bearish case seems plausible, investors should note that a sudden spike in buying pressure leading to a close above the channel’s upper trendline at $463 is also on the cards. 

If this were to happen, Aave price could blast off to the first supply barrier at $563. Slicing through this level might lead to further gains as it increases the odds for a 20% surge to $700.