Aave dropped nearly 10% during the 25th week of January. But the market reaction has not been dramatic. Open Interest [OI] The market is stable and funding rates are positive. Traders do not feel the need to rush out.
On the other hand, the network is approaching a major milestone in total loans issued – this disconnect is worth a closer look.
The AAVE is slipping, but the selling pressure is being measured
AAVE’s pullback continued from $170-$175 to drift towards the mid-$150s. Prices showed lower closings but decline had not yet become aggressive. RSI read neutral so pace was slow.
MACD was still in the negative zone, so there is a bearish short-term trend. The histogram, however, had begun to flatten, which means that the downward trend is not as strong as it seems.
The volume profile data showed that buyers were also present at the moment of writing.
Derivatives numbers look steady
In the last week, Aave’s [AAVE] Amount of Open Interest [OI] Traders have not rushed to shut down their positions, despite the drop.
Coinalyze
The Funding Rates were also positive throughout the majority of this period. The traders were willing to pay more to remain exposed.
There was no significant spike in either of the metrics, and therefore, no one is upset. panicking yet.
This is the big picture
Protocol is a term that describes a set of rules or guidelines. now closing in on This milestone represents the cumulative origination of $1 trillion worth of loans. The significance of this milestone comes from the fact that its liquidity has been reused more than simply by capital inflows.
Source: X
Flash loans, improved borrowing methods, and the expansion of multiple chains allow for the use of the same fund to be used repeatedly in trade, arbitrage and liquidation. In time, demand for on chain credit has increased loan volume to levels similar with the largest U.S. Banks.
Conclusions
- AAVE may have dropped 10% in price, but traders remain optimistic.
- This network has issued loans worth over $1 trillion!
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Source: ambcrypto.com
