These 3 indicators forecast a short-term downward movement for AAVE

July 19, 2021 - Around 3 mins mins to read

The past week has been pretty bad for both bitcoin and altcoin bulls. The crypto market has hardly seen any major upward movements as most coins continue to consolidate. AAVE’s status is no exception. The 28th largest cryptocurrency is trading at $ 250.43, down nearly 6% in 24 hours and 18% in the last 7 days.

The question now is, will the AAVE sale end soon? Three of the following on-chain metrics give us the answer.

Inactive coins start moving

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AAVE price (green) and inactive coin dispenser (pink) | Source: Santiment

This indicator shows that a significant amount of previously inactive AAVE tokens have been moving between addresses since July 10th. The spikes in the chart essentially indicate that the original investor sold their tokens and this contributed to the recent AAVE price drop. Should this trend continue, AAVE’s price will continue to fall.

Ratio of NVT

The NVT ratio shows a different trend. In fact, when this rate is low, it means that the network value is not keeping up with the increasing network usage. However, such move is usually a bearish signal. While the curve appears to be moving north at the time of writing, a reversal has yet to be confirmed for two main reasons.

First, the current coefficient (33.7) is clearly not near the 6/6 peak (95.1). Second, given recent curve action, it is reasonable to assume that the emerging bullish line will soon turn bearish in the next few days. Should the current upward trend continue, however, a parallel increase can be expected.

In view of the scenarios mentioned above, the possibility of a longer downward phase currently seems more plausible than a trend change.

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BILLIONrating GNetwork Value to Transaction (NVT) from AAVE | Source: Glassnode

Swap input line Exchange

The volume that goes into the exchange also shows that people are selling coins. Again, this is not a good sign for AAVE prices. As shown in the graphic of Glass knot, the total number of tokens transferred to exchanges has increased in the past few days. For example, on July 10, only 10.5k tokens were transferred to Exchange wallets, down from 48.6k at the time of writing.

In addition, the DeFiPulse chart showing the Total Value Locked (TVL) in Aave is not gaining momentum. It is believed that the rather contradicting ups and downs are the cause of the previous loss of dominance of AAVE in the DeFi area.