Quick Read
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AAVE tumbled 12.6%, which was more than triple Ethereum's 3.7% drop, after a dormant whale moved $22.9 million in AAVE to exchanges.
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No on-chain sales have been confirmed yet; if the whale's coins exit exchanges unsold, AAVE could retest its 50-day average of $150.
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Worldcoin, the other token in the whale's transaction, fell 25.7% over the week, illustrating how thin order books amplify large single-holder moves.
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Aave(CRYPTO:AAVE) experienced a steep decline of 12.6% over the past week, which is more than triple Ethereum's(CRYPTO:ETH) 3.7% drop, after a dormant whale transferred $22.9 million in AAVE to exchanges. Currently, the AAVE price stands at $132, below its lowest daily close of $136 over the previous 30 days.
The outlook for AAVE looks even more concerning over the longer term. The token has fallen 17.6% over the last 14 days and trades 80% below its all-time high of $662, reached on May 18, 2021. Traders are closely monitoring whether it can hold the $120 support level, about 9.4% below its current price.
A Dormant Whale Sent $22.9 Million in AAVE to Exchanges
The drastic drop can be partly attributed to a major institution that had been inactive for over a year. The institution moved $22.9 million in AAVE and $10 million in Worldcoin(CRYPTO:WLD) to exchanges, according to blockchain-tracking firm Lookonchain.
In crypto, a whale is a large wallet that can influence a coin's price through trades. Depositing coins to an exchange can signal a sale, as it suggests a large player may be preparing to sell.
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However, a deposit does not guarantee a sale. Institutions might move coins for various reasons, such as custody, collateral for loans, or to facilitate private trades. There is no on-chain evidence yet that the whale has sold any AAVE. A whale's next move could provide critical insights for AAVE holders, possibly more than any price chart.
Despite this, the mere presence of a large deposit can prompt traders to act quickly. Many might sell as soon as they notice a whale deposit to prevent being caught in a sudden large sell-off. This preemptive selling can drive prices lower out of fear, but if the whale decides not to sell, pressure may ease once those anxious sellers exit the market.
A Weaker Crypto Market Explains the Rest of AAVE's Drop
While the whale's move is a significant factor, it doesn't explain the entire decline. On October 26, Bitcoin(CRYPTO:BTC) also dipped, contributing to a broader crypto market downturn. So AAVE was already on a downward trajectory when news of the whale's actions surfaced.
Despite these fluctuations, AAVE's price drop does not necessarily reflect poor performance in its underlying business. Aave is a decentralized lending platform where users can deposit cryptocurrency to earn interest or borrow against it. The AAVE token primarily lets holders vote on the protocol's governance. Importantly, borrowers continue to pay interest regardless of the token's price, so the lending business can remain stable even as the token's value declines.
AAVE Price Falls Below Its 20-Day and 50-Day Averages
In trading terms, AAVE is trading below its 20-day average of $155 and its 50-day average of $150, suggesting a short-term downward trend. However, it still holds above its 200-day average of $107, which serves as the long-term trend indicator.
AAVE fell as low as $129 during the day's busiest trading hour. Buyers stepped in, causing the coin to trade between $130 and $133 thereafter.
Notably, trading volume during this decline has been significantly lower than the heavier trading sessions observed in late September and early October, when AAVE reached a 30-day high of $184 on October 5. The reduced volume suggests a consistent trickle of selling, but mass panic selling, often seen at market bottoms, has not yet materialized.
Ethereum Held Up Better Because Its Market Is Far Deeper
While AAVE struggled, Ethereum gained 1.4% in the 24 hours, compared with AAVE's 1.8% loss. Meanwhile, Worldcoin, the other token involved in the whale's transaction, fell 25.7% over the week.
In the past 30 days, AAVE lost 14.5%, while Ethereum lost 13.0%, a much smaller gap than this week's. This suggests AAVE's recent struggles are largely due to whale activity over the last week.
Market depth is a key factor here. Ethereum has much higher trading volume, so a $22.9 million order would have minimal impact. In contrast, AAVE and Worldcoin have thinner order books, so a large sell-off by a single holder can cause sharp price drops. This dynamic is why traders often sell these tokens quickly when they notice a whale deposit.
Can the AAVE Price Hold Above $120?
In the near term, it appears that AAVE can likely stay above the $120 mark. The decline seems to be primarily a reaction to whale activity, which has not yet resulted in any confirmed sales. Lookonchain's data reflects deposits rather than actual sales, and lower trading volumes suggest fear, not a flurry of selling, has driven most of the price decline.
AAVE began its 60-day period at $122 on August 28, making $120 a significant psychological level as it aligns with the price before its surge to $184.
If AAVE closes below $129, it could signal weakening buying, and confirmation of the whale's sale could push prices lower. If it drops below $120, the next support level to watch is the 200-day average at $107, which is 19.1% away, followed by the 90-day low of $86 recorded on August 16.
On the brighter side, if the whale's coins remain unsold and exit exchanges, it could ease selling pressure, allowing AAVE to potentially retest its 50-day average of $150, 13.0% above its current price.
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