Aave (AAVE) recently surged by 25.3%, hitting a peak of approximately $102.2 over the past week amidst a broader cryptocurrency market uptrend fueled by Justin Sun’s $21M AAVE and MKR deposit into Binance.

However, the momentum has since slowed, with Aave’s price retracing to around $99.18 as of the latest trading session, marking a 4% decline from its recent high.

Decline in unique AAVE holders

In tandem with this price action, Aave’s Total Value Locked (TVL) within its lending protocol rose to $12.3 billion, up 7.5% week-over-week.

Despite this, data from Santiment reveals a slight decrease in unique AAVE holders, dropping from 168,340 to 167,900 addresses over the same period.

This shift suggests potential changes in investor sentiment or strategic movements among token holders.

Simultaneously, Aave’s open interest has surged from $31 million to $55 million recently, indicating heightened market activity and increased participation in leveraged positions or futures contracts linked to Aave.

Source: CoinGlass

Why is AAVE’s price dropping?

Market analysts attribute Aave’s recent price decline to the Relative Strength Index (RSI), which entered the overbought territory, triggering short-term profit-taking and price corrections as investors adjust their positions.

Currently, the RSI stands around 43, moving away from overbought conditions and nearing the oversold zone.

AAVE/USDT H4 price chart

Looking forward, sustaining Aave’s bullish trajectory hinges on the RSI stabilizing below the 50 mark, potentially signaling a rebound when it reaches oversold levels.

However, ongoing volatility in Aave’s price could intensify, particularly in response to significant whale activity or increased liquidation events in the market.

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