AAVE Whales Sell Holdings, Signaling Potential Price Drop

AAVE, the governance token of the prominent lending protocol Aave, is experiencing downward pressure as large holders, or whales, initiated significant sell-offs early Tuesday.

AAVE, the native token of the decentralized lending protocol Aave, is facing selling pressure as large holders, or "whales," are observed to be selling off their AAVE holdings, according to on-chain data.

🔎 Breaking Down the Whale Activity 🔎

On Tuesday, X-chain sleuth Lookonchain highlighted that AAVE whales are indeed selling their holdings, with substantial withdrawals evident in recent transactions.

For instance, one whale, address 0x7634, withdrew 25,790 AAVE (around $3.39 million) from the Aave protocol and transferred it to the MEXC exchange. Notably, just three hours prior to this transaction, another whale, address 0x790c, had also withdrawn 7,822 AAVE (approximately $1.04 million) from Aave and sent it to Binance.

Furthermore, crypto trading firm Cumberland is observed to have deposited 10,000 AAVE into OKX.

Collectively, the actions of these AAVE whales have led to a sharp increase in the exchange flow balance for AAVE. According to data from Santiment, at press time, this balance is 53,000 AAVE, which marks the highest single-day flow into exchanges since September 10.

The Exchange Flow Balance metric measures the net flow of a cryptocurrency into or out of exchanges, calculated by subtracting the total amount withdrawn from the total amount deposited. An uptick in this metric indicates that large quantities of the asset are being sent to exchanges. Such substantial inflows often signal potential price drops, as the added sell pressure can overwhelm the market's capacity to absorb it.

In line with this, the negative price daily active address (DAA) divergence for AAVE further confirms the rising selling pressure in the market. At press time, the DAA value for AAVE is -39.24%.

This metric compares an asset’s price movements with the changes in its number of daily active addresses. Investors use it to track whether the price movements are supported by corresponding network activity. A negative value suggests weakening demand and potential selling pressure.

Considering both the on-chain and price movements, AAVE seems to be at a critical juncture, poised for either a price drop or a potential rally, depending on how the market reacts to the selling pressure and whether any buying support emerges.