Leading decentralized finance (DeFi) lending protocol Aave’s native token, AAVE, is forming a concerning pattern on the 4-hour chart that might be a cause of concern for the bulls. If the bearish pattern completes, then AAVE could potentially be looking at a price target of around $88.
AAVE forming head and shoulders pattern
According to a Tuesday X post by crypto analyst TeamLamboX, AAVE is developing a bearish head and shoulders pattern that could see the digital asset’s price crash for the current $94 area all the way down to $88.
For the uninitiated, a head and shoulders pattern is a bearish reversal formation consisting of three peaks, with the middle peak – the head – higher than the two outer peaks – the shoulders.
The pattern is confirmed when price breaks below the neckline, signaling that the prior uptrend is weakening and a downward move may follow. The same shows in the chart shared above, with the head forming around $102, and the shoulders taking shape around $96.5.
That said, on a longer time-frame – such as the daily chart – AAVE presents a much more bullish picture. In an X post by seasoned crypto trader Michael van de Poppe, AAVE has flipped the 21-day moving average (MA) and the 50-day moving average (MA) for support for the first time in a year.
The analyst added that flipping the aforementioned 2 MAs into support levels show AAVE’s bullish strength. Poppe concluded that it is only a matter of time before AAVE breaks through the $100 level.
To assume that AAVE is showing bullish characteristics without any solid reason wouldn’t be accurate.
On Wednesday, Aave Protocol unveiled its latest offering, Stable Vaults. The smart contract infrastructure allows fintech companies and exchanges to offer fixed-rate stablecoin yield to their users without managing DeFi systems themselves.
Institutions are gobbling up AAVE
Demand for AAVE is not just limited to retail investors. Various institutions have publicly shared their bullish stance toward the digital asset, saying that it is massively undervalued at prevailing market prices.
On June 16, crypto research and asset management firm Bitwise said that AAVE’s fair valuation is around the $100 level.
In the same vein, on June 24, banking giant Standard Chartered noted that rapid DeFi tokenization expansion can lead to significantly higher deposits on Aave, and consequently, a much higher valuation for the DeFi protocol.
