Aave Outperforms Bitcoin But Meets Resistance: Is a Reversal Coming?
- Aave outperformed Bitcoin but faced critical resistance.
- The fundamentals of the protocol are performing well.
Aave [AAVE] continues to lead the crypto space despite questions surrounding the revenue model of the decentralized finance (DeFi) blue chip.
Some industry voices have suggested re-evaluating revenue and spending criteria in decentralized systems, given that these protocols are not traditional companies.
Nonetheless, the AAVE/USDT pair broke out of a significant 800-day range, which has caused the pair to move higher over the past two months, outperforming Bitcoin [BTC] during that period.
AAVE/BTC has been showing higher highs and higher lows since June 18, but it recently encountered strong resistance around the 0.003 BTC area. This resistance, coupled with Bitcoin’s recent performance, has slowed the pair’s upward movement.
While Aave is expected to continue to rise due to strong fundamentals, its pairing with Bitcoin may underperform in the short term.
Source: TradingView
Additionally, the Chaikin Money Flow (CMF) indicator also showed that traders were taking profits and funds were flowing out of the AAVE/BTC pair.
However, its overall trend remains positive, especially when traded against stablecoins, where it is expected to outperform as AAVE and Bitcoin are likely to rise together in Q4.
This could be a signal for the start of a reversal on Aave’s BTC pair, but it has yet to be confirmed as…
Aave's stablecoin exceeds $150 million
A significant factor driving Aave’s upward momentum is its stablecoin, GHO. GHO has grown steadily since its launch during the bear market, keeping pace with Curve’s stablecoin (CRV).
At the beginning of September 2024, GHO supply increased by over 6.7% and now stands at over $150 million in outstanding supply.
Source: Token Terminal
Although CRV has a larger supply than GHO, both stablecoins have huge growth potential.
As GHO continues to grow, it reinforces the broader Aave protocol and its potential for long-term growth.
Positive open interest weighted funding rate
Moreover, the open interest-weighted funding rate reflects bullish sentiment. According to the latest data, the rate is 0.0058%, indicating that longs are paying shorts.
Source: Coinglass
This indicates strong buying demand for Aave, consistent with its positive price outlook. The rise in demand suggests that traders are optimistic about further price gains for Aave in the near term.
Rising sentiment and concern
Finally, Aave’s social sentiment and attention are also showing a bullish trend. According to data from the Kaito AI platform, positive sentiment about Aave has reached a record level.
With potential factors such as Trump integration, buybacks, and Sky partnership, Aave is poised for further growth.
Source: Kaito AI
Aave’s overall outlook is strong, especially relative to stablecoins, which suggests that its price could rise. It will continue to perform well in the DeFi space and its price will move higher in the future.
