AAVE Targets Breakout as GHO Launch Stirs Market Anticipation

• AAVE has integrated the GHO stablecoin with Chainlink’s CCIP.
• Expectations remain high for AAVE prices to rally, judging by the ecosystem outlook.

The successful launch of algorithmic US dollar-pegged stablecoin “GHO” on the Aave protocol has stirred breakout anticipation of the native token. Aave also aims to improve GHO stability and prioritize architecture for cross-chain liquidity.

GHO Partners With Chainlink

Decentralized finance protocol Aave Labs announced a recent partnership with Chainlink, a leading Oracle network. The partnership expands the cross-chain transfer of GHO via Chainlink. As a result, GHO is now available as a fee token for bridging any token using Chainlink CCIP. 

GHO is now available as a fee token for bridging any token via @Chainlink CCIP, offering users a simpler way to transfer GHO across supported networks. pic.twitter.com/DKhbaxtDdG

— Aave Labs (@aave) October 21, 2024

This provides users with a simpler option to move GHO across supported networks. So far, GHO has bridged $31.2 million, representing the second-largest asset by volume of Chainlink Cross Chain Interoperability Protocol (CCIP).

Aave has also announced intentions to expand GHO cross-chain support to Base and Avax C-Chain. With the GHO aiming to facilitate seamless cross-chain liquidity, many now wonder whether it would trigger a price rally for Aave’s native token, AAVE. 

AAVE trades at $148.30, down by 2.0% at press time. Based on technical indicators, the price hovers in the middle of its Bollinger Bands, indicating consolidation.

The Relative Strength Index (RSI) is neutral at 49.29, indicating it is neither overbought nor oversold. As a result, AAVE’s price may retreat before a big increase despite its potential for a breakout.

On the bright side, AAVE’s transaction count has increased by 0.84% in the last 24 hours, reaching 166,200. This increase indicates that activity on the network is holding steady despite the minor price decline. If this trend continues, it may be a positive trigger for the token, especially as more users adopt GHO. Thus, a continued growth in transaction volume is required to sustain a bullish momentum. 

Meanwhile, AAVE’s exchange reserves recently increased by 0.55% to 2.6578 million tokens. Higher reserves usually indicate a rise in selling pressure as more tokens are kept on exchanges, most likely in anticipation of liquidation. 

This trend could, therefore, offset any prospective price increase. If reserves continue to climb, the prospect of additional selling pressure may dampen any immediate breakout.

Are Bears Winning the Market?

Recent data from CoinGlass shows a $1.27 million AAVE liquidated in short positions, compared to $146,080 in long positions. This disparity demonstrates that sellers presently have more power over the market. However, momentum may shift in favor of a price rally if buyers start to close the gap, particularly on larger exchanges like Binance.

Aave’s GHO launch presents a promising opportunity for bullish momentum. However, numerous variables, including rising exchange reserves and short-term selling pressure, may prevent an immediate rally. Therefore,  market conditions must improve for a sustained upward breakout to occur. 

Still, some experts predicted that, as CNF mentioned, AAVE’s price could rise over $160 by the end of the year.