TradeCityPro | AAVE : Insights into the DeFi Lending Giant👋 Welcome to TradeCityPro!
In this analysis, I’ll delve into the AAVE token. The current market conditions are challenging, and finding good positions is difficult. Therefore, I’ll focus more on explaining the project and less on chart analysis.
🔍 About AAVE:
AAVE is a blockchain-based platform that allows users to deposit their assets as collateral and borrow against them. Since the platform operates on the blockchain, both collateral and loans are in the form of cryptocurrencies. A key parameter in this platform is the Health Factor, which is calculated based on the collateral amount and the borrowed amount. If this parameter falls below 1, the likelihood of liquidation increases significantly.
🔄 This platform enables users to borrow funds in a decentralized environment. Borrowed funds can be used directly or leveraged within the DeFi space for higher profits. However, this comes with specific risks, as highlighted earlier.
💸 AAVE generates revenue through interest rates charged to users. For instance, if a user supplies Ethereum to the platform, they earn a 5% return, while a borrower pays 7% interest. AAVE earns the 2% spread as its profit for mediating between the supplier and the borrower.
💰 Currently, the platform's Total Value Locked (TVL) stands at $19 billion, ranking second after Lido. This builds substantial trust among users. Due to its revenue model, AAVE is one of the few profitable crypto projects, enabling stakeholders to earn not only from token appreciation but also from platform-generated income.
🤝 Given AAVE's revenue model and the scarcity of profitable crypto projects, it has the potential to grow into one of the largest platforms in the crypto space. Already ranked second in TVL, it can further attract more users and expand its presence.
🔵 If AAVE continues to grow, its token could become one of the most critical assets in the market. With a market cap of $5 billion, AAVE currently ranks 30th by market cap. If its revenue remains stable and the project stays profitable, the token’s rank is likely to improve further.
📅 Weekly Timeframe: Strong Bullish Momentum and Parabolic Movement
In the weekly timeframe, there is a visible accumulation box with its ceiling at $130.24. After breaking this level, strong bullish momentum entered the market. Following a pullback and breaking the $202.63 resistance, the next significant resistance lies at $476.74.
📈 From the initial rise off the $51.76 low, the buying volume has surged significantly, validating the upward trend. The RSI entered the overbought zone after the break of $202.63, further propelling the price upward.
🚀 The $476.74 resistance is critical, coinciding with the ATH level. Breaking this level could lead to a new ATH. Currently, Fibonacci levels for subsequent targets cannot be determined until the price correction zones are identified. After completing the correction, further targets can be analyzed.
🔽 In a corrective scenario:
The first key zone is $202.63, especially if it aligns with the curved trendline, strengthening its significance.A deeper correction could reach $130.24, and breaching this level would end the bullish trend, signaling the start of a new market cycle.
✨ Breaking the $77.45 level would introduce bearish momentum, while a break of the $51.76 support could instill significant fear in the market, potentially leading to sharp price drops.
📅 Daily Timeframe: Signs of a Possible Correction
In the daily timeframe, the latest bullish leg can be examined in more detail. Currently, the price has hit the $381.71 resistance and is undergoing a correction after one test.
🔑 So far, the correction has not been deep, with the price shadowing to the 0.382 Fibonacci level and temporarily recovering. If the correction continues:
The 0.5 Fibonacci level is crucial and observable in lower timeframes.
📉 If both levels are broken, the next major support is $195.25, overlapping with the 0.786 Fibonacci level. This level is the last critical zone to maintain bullish momentum. Breaching it could bring bearish momentum into the market.
🔼 If the correction concludes and the $381.71 resistance is broken, the next resistance lies at $637.94. Breaking the 70 RSI resistance would reintroduce buying momentum. It is notable that the market volume hasn’t declined yet, which supports the bullish trend.
⏳ 4-Hour Timeframe: Futures Triggers
In this timeframe, I will focus solely on futures triggers since the higher timeframe scenarios are already analyzed.
🔽 After reaching the $381.71 resistance, the price entered a corrective phase, touching the 0.382 Fibonacci level before forming support at $295.77. Breaking this support would activate the first short trigger, though it is highly risky due to the overall bullish trend. Personally, I won’t take this position as the market trend is still upward.
💥 Another short trigger could emerge based on Dow Theory, but the market hasn’t yet established the necessary structure.
⚡️ For a long position, the primary trigger is the $381.71 resistance, which is a crucial level. I aim to open a long position if this resistance is broken to profit from the next upward wave. Since opening a position upon breaking this level is challenging, an early long trigger could be identified at $337.93. A break of $53.80, coinciding with the $337.93 resistance, could also provide a good opportunity for a long position.
📝 Final Thoughts
This analysis reflects our opinions and is not financial advice.
Share your thoughts in the comments, and don’t forget to share this analysis with your friends! ❤️ above.
