The AAVE cryptocurrency falls into the critical zone, indicating a possible rise

Aave (AAVE), an Ethereum (ETH)-based decentralized finance (DeFi) protocol, is one of the worst-performing coins in the last thirty days. With a decline of around 20 percent, the price has reached an extremely important support zone, which has caused significant price increases several times in the last few months.

AAVE crypto key support

Since the start of the new year, the price of AAVE has been in a downward trend. The price peaked at around $120 in early January, but has only fallen since then.

Thanks to a decline of more than 7 percent last week, the price has returned to important levels for the first time since mid-December Support about $83.

Compared to its high of $120, AAVE has already lost more than 30 percent. Current price levels should prevent further carnage.

Since November, the price of AAVE has fluctuated in a range between approximately $83 and $121. Since then, the support zone has been reached several times, triggering a strong upward move each time. This is clearly illustrated in the following X message from crypto analyst Nihilus.

If the price spikes again, a price of $121 is a realistic scenario in the near future.

If the current level is lost, a downward move to the next support at $62 is likely.

Negative financing

Nihilus also states in its message that there is negative funding. This means that short positions (sellers) pay the long positions (buyers), indicating an overweight of bearish Feeling.

If the price suddenly rises, a so-called “short squeeze” can occur. Short positions are forced to close their positions by buying back the asset, further driving the price higher and setting off a chain reaction. This can lead to a rapid and sharp price increase.

Furthermore, the opposite of what the masses expect often happens in financial markets.

Logically, AAVE’s price development depends heavily on what Bitcoin (BTC) has in store. Bitcoin price has been fluctuating between $41,300 and $44,000 for some time. If any of these levels are broken, a big price move awaits.

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