AAVE continued its loss streak, falling another 18% in the first week of March. It also lost the critical support of $122. As a result, AAVE was at a new 13-month low at the time of writing. At the time of writing, it was trading at $119.
AAVE misleads investors
On March 5, AAVE managed to save itself from a red candle and closed in green. Still, many investors bought AAVE at this level, considering it the current bottom of the market.
On-chain data supports this claim as on March 5, the protocol saw the most new users in more than nine months. Similarly, a sudden spike in deposits was also recorded.
In just two days, deposits on AAVE rose by 375% on the charts.
AAVE Price Promotion | Source: TradingView – AMBCrypto
On the contrary, investors expecting a sudden price hike were discouraged. At the time of writing, AAVE was down another 4.33%. Moreover, it is difficult to determine whether AAVE will improve in the near future.
First of all, the Parabolic SAR signaled the start of another downtrend as the indicator’s white dots shifted positions and moved above the candlesticks.
Another concern besides the SAR was the Average Directional Index (ADX) which stood at 24.82 at the time of writing. Should it cross 25.0 and continue to rise, the downtrend will strengthen. And it will certainly be against AAVE’s positive recovery.
AAVE deposits | Source: Dune – AMBCrypto
In fact, the Relative Strength Index failed to recover from the bearish zone as it remained below 40. Investors appear to be disappointed with the token’s performance. So it is necessary for AAVE to invite the question and go for a ride.
Interestingly, after the DeFi coin surged 11% on Feb. 28, trades soared to $158 million. While not a big deal in comparison, it was an achievement we hadn’t seen in nearly two months.
AAVE transaction volumes | Source: Intotheblock – AMBCrypto
Whether this will lure new investors to “buy the dip” remains a mystery, as the risk-adjusted yield of negative 2.40 flashed a clear “no sign”.
However, short-term investor behavior cannot be predicted. By extension, the price action is also not possible.
AAVE Sharpe ratio | Source: Messari – AMBCrypto
This post Extending the return of AAVE investors to this particular trend
was published first on https://ambcrypto.com/expanding-on-aave-investors-return-to-this-particular-trend/
