In the past few weeks, DeFi tokens have had some issues on their way up. AAVE is clearly one of the victims of the broader downtrend at DeFi. After losing more than 3% of its value in 24 hours, AAVE is actually trading at $ 310 before bouncing back a little at press time.

AAVE 1 Day Price Chart | Source: Tradingview

More and more characters optimistic

The market usually operates in cycles and any downtrend creates an uptrend on the price chart. Changes in trends are often accompanied by improved indicators.

On-chain data is now showing the first signs of a trend reversal.

In particular, the volume of net transfers from / to exchanges spent more time in negative territory in the last 2 weeks. This seems to suggest that the outflow is overshadowing the inflow.

Thus, the buying trend is spreading on a large scale.

Net transfer volume from / to AAVE exchanges | The source: Glass knot

The number of deposit transactions also highlights a rather interesting trend. This metric shows the number of all inbound and outbound transactions related to the AAVE sender address on a daily basis. The peaks on the chart usually indicate increased selling pressure in the short term.

If you look at the chart below, there has been no spike in price action so far. In fact, deposit trades have hit lower lows on the chart in the past few days, showing that selling pressures are slowly easing.

AAVE deposit trading | The source: mood

What is the status of the network??

The MVRV ratio of this DeFi token is also starting to increase in positive territory. Essentially, this means that HODLers are currently earning a little more than usual – a pretty good sign. If the above trend remains unchanged, a period of intense profit-taking is likely to occur.

Additionally, liquidity on Aave has increased since mid-October, with the platform’s total value hovering around the $ 18 billion mark – an increase of nearly 40% from its September low.

However, it is also important to note that the loan-to-value ratio (LTV) goes down. LTV assesses the ratio of the loan to the value of an acquired property. The final risk is taken into account based on sufficient liquidity to cover the outstanding balance. Therefore, the lower the LTV, the lower the risk of a user / lender providing liquidity to the protocol.

The LTV for AAVE has been mostly in the 12% to 17% range for the past week – pretty good. In July of this year, the LTV was 35%.

Total locked in Aave | The source: DeFiPulse

In summary, taking into account the above forecasts, it is very likely that the trend on AAVE’s price chart will reverse.

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