Aave Price Forecast: Poised for double-digit correction as holders book profit
- Aave price hovers around $343 on Thursday after correcting more than 6% this week.
- The recent decline has led to $5.13 million in total liquidations, 84% from long positions.
- AAVE NPL metric shows a massive spike, suggesting that holders are realizing profits and increasing the selling pressure.
Aave (AAVE) price hovers around $343 on Thursday after correcting more than 6% this week. The recent downturn has led to $5.13 million in total liquidations, 84% of which were from long positions. Aave’s Network Realized Profit/Loss (NPL) indicator shows a massive spike, suggesting that holders realize profits and increase selling pressure, hinting at a double-digit correction ahead.
Aave bulls show signs of exhaustion
Aave price faced a correction on Tuesday after reaching the $400 level on Monday following a rally of more than 30% the previous week. At the time of writing on Thursday, it hovers around $343.
If AAVE continues its pullback, it could extend the decline by 17% to retest its next support level at $284.63.
The Relative Strength Index (RSI) on the weekly chart reads 74, above its overbought level of 70 and points downwards, indicating weakness in bullish momentum. If the RSI slips below the overbought level, it could indicate a downward trend ahead.
AAVE/USDT weekly chart
Aave’s recent decline on Wednesday triggered a wave of liquidations totaling over $5.13 million, with 84% coming from long positions, according to data from CoinGlass.
Liquidations like this could spark Fear, Uncertainty, and Doubt (FUD) among AAVE investors, raising selling pressure and leading to a further decline in its price.
AAVE Liquidation chart. Source: Coinglass
AAVE’s Network Realized Profit/Loss (NPL) indicator from on-chain data provider Santiment adds further credence to the bearish outlook. The NPL metric shows a massive spike on Tuesday, rising from 24.29 million to 292.44 million, almost 12 times in one day. Strong spikes in a coin’s NPL indicate that its holders are, on average, selling their bags at a significant profit and increasing the selling pressure. A similar move could be seen on February 24, 2021, where the metric spiked almost 20 times in one day, leading to a 25% decline in AAVE’s price in the next five days.
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AAVE NPL chart. Source: Santiment
Author
Manish Chhetri
FXStreet
Manish Chhetri is a crypto specialist with over four years of experience in the cryptocurrency industry.
