Analyst indicates strong rise for AAVE

On Wednesday, the cryptocurrency AAVE (AAVE) continued its upward trajectory, registering an increase of 3.5%, reaching a value of US$ 133.42, consolidating a gain of 15% since last Monday.

According to cryptocurrency analyst Manish Chhetri, on-chain data points to the continuation of the upward trend, but with some caveats.

Chhetri highlights that interest in AAVE futures contracts on major exchanges has increased significantly, which is a positive sign for the market.

“CoinGlass data shows that AAVE’s Open Interest (OI) rose from $106.24 million on Monday to $177.55 million on Wednesday, reaching its highest value this year,” the analyst said.

He explains that OI represents the total number of open derivatives contracts that have not yet been settled, and the increase in this indicator suggests that more money is entering the market, driving new purchases.

AAVE

This upward trend in OI is generally seen as a sign of optimism among investors, indicating that the market may continue to rise.

“When OI increases, it reflects the entry of new money into the market and a buying trend, which reinforces the expectation that the price of AAVE will continue to rise,” explains Chhetri.

However, he warns that a decline in OI could signal a potential sell-off in the market, with more investors exiting and the current trend coming to an end.

In addition to the increase in OI, another positive data highlighted by Chhetri is the growth in the number of daily active addresses on the AAVE network. According to him, Santiment’s Daily Active Addresses index, which monitors network activity over time, showed a 65% increase between Monday and Wednesday, the highest since December 2023.

Thus, he points out that this indicates a greater demand for the use of the AAVE blockchain, which could further boost the price of the token.

Another indicator that reinforces the bullish sentiment towards AAVE is the long-to-short ratio, which stands at 51.06%, according to data from CoinGlass. Chhetri explains that this figure above 50% suggests that most investors believe that AAVE’s price will continue to rise.

However, not everything is a reason to celebrate. The analyst draws attention to the Network Realized Profit/Loss indicator, which has shown a significant increase in recent days.

“This indicator reveals that on average, AAVE holders are selling their holdings at a significant profit. This could signal a short-term correction as many investors tend to take profits after a significant rally,” warns Chhetri.

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