Aave Token May Face Further 15% Drop Amid Bearish Indicators Post-Buyback

• Aave’s buyback initiative repurchased over 94 million tokens worth $22 million since May, aiming to reduce supply and boost confidence.

• The token rallied to $385 in August due to DeFi strength but has since faced prolonged weakness tied to Bitcoin’s slump.

• Current taker sell volume exceeds buys by a ratio of 0.918, supporting a bearish outlook with next supports at $170 and $141.

Discover how Aave’s token buyback program impacts price amid market volatility. AAVE faces bearish pressures despite deflationary efforts—stay informed on DeFi trends and predictions.

What is the impact of Aave’s $50 million token buyback program?

Aave’s $50 million token buyback program represents a strategic move to enhance token value through supply reduction, with weekly repurchases up to $1.75 million based on protocol revenues. Launched as a pilot in May, it has already acquired 94 million AAVE tokens valued at over $22 million, creating a deflationary pressure that initially propelled prices to $385 in August. However, ongoing market challenges have tempered these gains, leaving the token vulnerable to further declines.

How does recent market data signal bearish trends for AAVE?

The Taker Buy/Sell Volume data from CoinGlass reveals that over the past month, AAVE’s 24-hour trading volume has seldom favored buyers, with sellers maintaining dominance and limiting upward momentum. At present, the Long/Short Ratio stands at 0.918, indicating higher taker sell activity that could drive prices lower in the near term. This aligns with broader DeFi sector pressures, where Bitcoin’s drop below $108,000 on November 3 exacerbated selling, pushing AAVE toward critical support levels. Analysts note that without a reversal in volume trends, the token’s recovery remains uncertain, as bearish crossovers in moving averages reinforce the downward trajectory.

Source: CoinGlass

Aave, as a cornerstone of decentralized finance (DeFi), continues to innovate despite these headwinds. The protocol’s governance recently approved the expansion of the buyback from its initial pilot phase, demonstrating community commitment to long-term sustainability. According to data from DeFi analytics platforms, Aave’s total value locked (TVL) remains robust at over $10 billion, underscoring its resilience even as token prices fluctuate. This buyback mechanism not only reduces circulating supply but also signals to investors that the project prioritizes token holder value, a tactic employed by several leading DeFi protocols to navigate volatile markets.

However, the broader cryptocurrency landscape has not been forgiving. Bitcoin’s recent correction below key supports has rippled through altcoins, with AAVE experiencing heightened volatility. Trading volumes on major exchanges show a spike in sell orders, particularly from leveraged positions, which has amplified the downside. Market observers from firms like Messari highlight that DeFi tokens like AAVE are particularly sensitive to liquidity shifts, as they rely on protocol utilization rates that can swing with investor sentiment.

Aave prices to slide another 15%

The current price action positions AAVE precariously at the $200 mark, a level that has become a battleground for buyers and sellers. If breached, technical indicators suggest a swift move toward the $170 support, representing about a 15% drop from current levels. This projection is bolstered by the token’s inability to reclaim higher ranges, with momentum oscillators like the Relative Strength Index (RSI) hovering in oversold territory but lacking bullish divergence to signal a reversal.

Historical patterns post-buyback announcements show initial spikes followed by consolidation, but the absence of sustained buying interest this time points to weakening fundamentals in the short term. Protocol revenues, which fund the buybacks, have stabilized around $5-7 million monthly, per on-chain data, yet this has not translated to price appreciation amid global economic uncertainties affecting risk assets.

Source: AAVE/USDT on TradingView

Range breakdown confirms bearish bias

On the daily timeframe, AAVE has been in a clear downtrend for more than a month, characterized by successive lower highs and lower lows. The 20-day moving average crossing below the 50-day average further cements this bearish structure, with price action failing to test upper resistance zones. Since May, the token had consolidated within a $221 to $336 range, but the latest volatility has shattered the lower boundary, flipping the $210-$225 area into resistance.

Looking ahead, traders should monitor $170 as the immediate support, followed by $141 if selling intensifies. On-chain metrics from platforms like Dune Analytics show declining active addresses and borrowing volumes, which could prolong the pressure on prices. DeFi expert Stani Kulechov, Aave’s founder, has emphasized in recent statements the protocol’s focus on risk management and innovation, such as integrations with real-world assets, to drive future growth. Yet, in the current environment, these developments may take time to influence market sentiment positively.

The buyback program’s continuation is a positive signal, with projections for additional repurchases if revenues hold steady. Historical data from similar initiatives in other protocols, like Uniswap’s token burns, suggest that while short-term volatility persists, long-term supply reductions can support price floors. Nonetheless, AAVE’s correlation with Bitcoin remains high at over 0.85, meaning any BTC recovery could alleviate some downside risks.

Frequently Asked Questions

Has the Aave token buyback program helped bolster market confidence?

The buyback has provided some uplift, repurchasing 94 million tokens since May and reducing supply amid DeFi rallies. However, recent price range formations and bear control indicate limited long-term confidence gains, with sellers dominating volume.

What are the next support levels for AAVE price in a bearish scenario?

In a continuing downtrend, AAVE could test $170 as primary support, with $141 as a deeper level if breached. These zones align with historical lows and Fibonacci retracements, offering potential buying opportunities for long-term holders.

Key Takeaways

• Aave’s buyback success: Over $22 million in tokens repurchased, creating deflationary pressure despite market weakness.
• Bearish indicators: Taker sell volume and range breakdown signal 15% downside risk to $170 support.
• Future outlook: Monitor Bitcoin trends and protocol TVL for reversal signals; consider diversified DeFi exposure.

Conclusion

Aave’s token buyback program and robust DeFi positioning offer a foundation for recovery, yet current bearish trends for AAVE from volume imbalances and technical breakdowns suggest near-term declines. As the market navigates ongoing volatility, staying attuned to protocol updates and broader crypto movements will be key—investors may find value in accumulation during dips for potential long-term gains.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.