How bullish is Aave after recovering from the $50 bottom?

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How bullish is Aave after recovering from the $50 bottom?

By Motiur Rahman - min read
  • AAVE has been recovering from the $50 bottom

  • The cryptocurrency has suffered from limited DeFi activity

  • AAVE needs to overcome resistance at $71 and the descending trading channel

Aave price (AAVE/USD) touched a low of $50 on November 22. The level is a crucial support that AAVE traded at in June. Afterwards, AAVE embarked on strong bullish momentum, hitting $115 in August. If history repeats itself, AAVE buyers could look at another bullish rally that could last for a while. However, it is not that straightforward.

Since August, AAVE has been bearish. The cryptocurrency has been making lower lows and lower highs. Although the cryptocurrency recovered strongly in October, the FTX crash inspired a sharp drop to the $50 bottom. However, with AAVE trading at $62 as of press time, it gives hope that AAVE could continue to surge. 

The Achilles’ heel of Aave has been a decline in DeFi activity. Aave is a leading decentralised lending ecosystem. It allows users to borrow and lend crypto assets for a reward. However, activity has been falling, with the total value locked at $3.76 billion as of press time. The TVL is a drop from $5.4 billion a month earlier. It also compares sharply to a TVL of $18.94 billion in October 2021. Consequently, a sustained recovery of AAVE could be tied to the uptick in DeFi activity and cryptocurrencies.

AAVE trades on a descending channel amid recent price recoveries

AAVE/USD Chart by TradingView

A technical outlook shows AAVE losing bullish power near the $71 resistance. This is the immediate resistance that AAVE needs to overcome to consider a further upside.

But besides the resistance, AAVE trades in a descending channel. Investors could shift attention to whether the cryptocurrency will break above the upper limit of the descending channel.

Will AAVE go higher?

AAVE is not yet bullish despite the recent recoveries. Nonetheless, a recovery above $50 should reignite hopes for buying AAVE. To consider a bullish bias, a recovery above the $71 resistance and the descending channel is needed.

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