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The cryptocurrency market is struggling to drive a sustained recovery trend as Bitcoin price waver around the $100k milestone. A potential breakdown in BTC could drive a post-rally correction in most major altcoins including AAVE price. The recently heightened social volume associated with leading decentralized finance (DeFi) protocols has a higher potential for a bearish reversal.
According to Coingecko data, the AAVE price exchange hands at $355.6 with an intraday loss. Meanwhile, the asset market cap is at $5.35 Trillion, while the 24-hour trading volume is at $19.2 Billion.
- Crypto analysts hint that heightened sentiment and social volume could lead to a short-term pullback in AAVE price.
- The oversold ADX indicator signals exhausted bullish momentum, and a potential reversal is near term.
- The 20-day exponential moving average has acted as a suitable pullback support for crypto buyers.
Strong Crowd Sentiment Drives AAVE Price to Multi-Year High
The cryptocurrency AAVE is gaining significant attention, as highlighted by the rising social volume and overwhelmingly positive sentiment within the community. According to data shared by trader Ali Martinez, these metrics indicate a surging interest in AAVE, driven by strong crowd enthusiasm.
However, his analysis also warns of potential market dynamics, where heightened sentiment could precede a short-term price pullback, as markets often tend to counter prevailing trends. The AAVE price rally has recently hit a 3-year high of $388.5, which could witness a notable correction to recuperate the bullish momentum.
The social volume and positive sentiment around $AAVE are soaring. With the crowd’s growing focus on #AAVE, a brief pullback might be on the horizon, as markets often move against popular sentiment. pic.twitter.com/O9JgwhqfBO
— Ali (@ali_charts) December 13, 2024
AAVE’s Recovery Signals Potential Exhaustion
Over the last three weeks, the AAVE price rallied significantly from $151.8 to $390, accounting for a growth of 157%. The recovery trend, backed by increasing trading volume and social activity, has breached another key resistance of $348.
If the flipped support holds, the coin buyers could raise the asset by 27% up to hit the $448 barrier.
However, unidirectional rallies are less likely to be prolonged until fueled by supporting news. The current recovery trend stretched far from the fast-moving daily EMAs, such as 20 and 50, hints at an overextended rally.
Similarly, the momentum indicator ADX spike to 37% indicates the market buyers could soon hit exhaustion and drive a bearish reversal.