New year, new quarter, and a great candidate for some fresh price action. That’s what investors and traders expect from the broader market. The first two days of 2022 have seen no drastic changes to the price trajectories of most altcoins and even king coins. However, some altcoins like AAVE look stronger as the year begins.
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AAVE is on the rise
To accelerate development, DeFi marketplace platform Aave has revealed plans to launch a new mobile wallet for users in 2022. It is also set to move to Curve Finance and SushiSwap to expand the market size. . In fact, scaling the AAVE protocol could boost Aave’s user base while also boosting on-chain activity on the platform.
Recently, the protocol team launched a cross-chain governance bridge. This will help the protocol to be managed across multiple networks from the mainnet administration. Additionally, the AAVE community is working to enable gas-free voting and make governance holistic for users on the network. Overall, with targets for the first quarter of the new year, AAVE seems to be gaining momentum, especially for ecosystem-focused developments.
On the price front, AAVE’s chart shows a strong parabolic bounce in December after a drop to $159, marking a gain of more than 70% on Dec. At press time, AAVE price has formed a symmetrical triangle, offering hope of a breakout in the coming days.
However, the question is, with the upside momentum waning, will the ecosystem-focused developments be enough for AAVE to recover?
HODLer to the rescue
AAVE’s short- and medium-term ROI did not increase as the 7-day and 3-month ROI were -4.9% and -15%, respectively, at the time of writing. However, with the Sharpe ratio increasing, it appears that the asset’s performance, relative to the ‘risk-free’ asset, has been relatively better than it was on 12/10 when it was at -7.
With the price action weakening, active addresses also descend. This highlights the lack of activity on the network. Also, in the past few days, some longtime hodlers seem to have sold AAVE to take profit as the consumption reached more than four million as of December 31st.
Going forward, HODLer AAVEs that have entered the market recently will need to push prices further, in addition to restoring activity on the network. Furthermore, for the asset to recover with reduced selling pressure, the $330 mark will be an important resistance level according to the In and Out of Money indicator.
On the plus side, however, the AAVE team has begun work on V3, an open source protocol that aims to create capital efficiency, reduce risk, and cross-chain bridging. Additionally, gas-free voting and more inclusive governance are on Aave’s roadmap for 2022. According to many, this could spur AAVE to cover the gap by more than 60% compared to ATH.
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According to Ambcrypto