AAVE price action has finally broken out of its downward resistance after struggling to find any directional balance over the past few days. The move came after the protocol announced the launch of a new liquidity mining program for Optimism.
The world of decentralized finance or DeFi on Ethereum has a variety of exponents and services, and one of them is AAVE. AAVE (Danish word meaning “ghost”) is a decentralized lending platform that has established itself as one of the largest and longest-running projects in this sector.
The announcement about the Optimism liquidity mining program appears to have fueled a shift in investor sentiment in favor of the bulls. This is because Optimism is one of the most popular Ethereum Layer 2 scaling solutions, facilitating high volumes.
According to its website, Optimism’s on-chain value exceeds $800 million. In fact, it has reportedly helped save more than $1 billion in gas fees.
On August 4, @AaveAave, builder of an open source and non-custodial liquidity protocol, posted the following Twit:
“The @OptimismFND Liquidity Mining program is live on Aave V3. The program will run for 90 days with a distribution of 5M OP to the Aave Protocol’s Optimism Market users. Claiming support for rewards will be active soon! Feeling Optimistic.”
AAVE Price Action
The impact on AAVE’s price action means that investors expect the move to increase demand for the cryptocurrency. Although AAVE managed to break out of its descending resistance, it should still deal with friction near the $101 price range.
The explanation is that the same level represented resistance in the second half of July.
What to Expect
AAVE’s rise in the last hours was courtesy of the buying pressure that had been building since August 2. This was around the same time that the IMF pivoted due to accumulation, and the same goes for the RSI. However, it is not clear if the latest advantage will last.
AAVE’s current bullish performance could be short-lived unless the market manages to maintain its favorable bullish sentiments. This is because the main directions supply metric recorded a drop of 0.41% in the last few hours, indicating that the whales have been cashing in.
The advantage was also supported by a smaller increase in active addresses, compared to the previous spike in addresses on August 3.
The AAVE whale transaction count also saw an increase in activity over the past two days and this supported the latest uptrend.
However, whale transactions have been within an average daily count. In other words, nothing out of the ordinary seems to be happening in terms of buying pressure.
In short, although AAVE’s price increase reflected the Optimism announcement, its on-chain metrics explain the lack of strong momentum. Therefore, your short-term advantage may be limited.
By Audy Castaneda
