Aave Faces Rejection at $100 Resistance, Declines 11% as $88 Support Looms

$AAVE prices dropped 4% over the past 24 hours. On Friday, July 31st, the DeFi token reached an intraday high of $101.57 before retreating. Over the subsequent 48 hours, the token declined by 11.2%.

Aave is one of the largest decentralized lending protocols in DeFi by total value locked, enabling users to supply and borrow crypto assets across multiple chains. The AAVE token functions as a governance asset and can be staked in the protocol's safety module, linking its market performance to both broader crypto sentiment and protocol-level developments.

Data from Coinalyze revealed a 5% decrease in Open Interest over the past 24 hours. The Spot Cumulative Volume Delta (CVD) has also been trending lower in recent days, signaling selling pressure across both the spot and derivatives markets.

Funding Rates had remained negative over recent days, indicating an increased willingness among traders to take short positions. These rates have since flipped into positive territory.

The short-term outlook for $AAVE remains bearish, reflecting the token's repeated but unsuccessful attempts to break above $100 over the past week.

Separately, Aave founder Stani Kulechov announced plans to eliminate 50 reserve assets with low adoption and wind down the protocol's deployment on six blockchains. The move is part of a broader governance-driven effort to streamline operations and concentrate liquidity on higher-activity networks, though the market impact on the AAVE token remains to be seen as the changes are implemented.

Bearish Trend Persists on the Daily Chart

The swing structure on the 1-day chart maintained a bearish posture. Downward continuation was confirmed in May when the previous swing low at $85.05 was breached, establishing a new local low at $57.83.

Using the high preceding the bearish breakdown as an anchor for Fibonacci retracement levels, the 78.6% retracement at $105.81 has yet to be surpassed. The rejection from the psychologically significant $100 supply zone therefore reinforced expectations of further downside.

Technical indicators aligned with this bearish bias. The Chaikin Money Flow (CMF) sat below the -0.05 threshold, indicating substantial capital outflows, while the Accumulation/Distribution (A/D) indicator had been slowly declining since April.

Short-Term $AAVE Bias

Throughout most of July, $AAVE traded within a range between $88 and $100. At the time of writing, the token was positioned closer to the lower boundary of that range.

The -DI and ADX lines of the Directional Movement Index (DMI) both registered above 20, confirming a strong downtrend in progress. The CMF on the shorter timeframe also remained below -0.05, consistent with the daily chart readings.

If the $88 demand zone fails to hold, an extended drawdown toward $83 and potentially $72 becomes increasingly probable.

Key Takeaway

Aave's push to reclaim the $100 resistance was firmly rejected. The $88 support level will be the critical level to watch in the near term.

Source: AMB Crypto