Has the recent hack on Curve impacted AAVE, or were there already existing issues within the Aave DAO? Let’s explore the implications of the Aave DAO’s decision to acquire $2 million worth of CRV tokens, and the impact on AAVE holders and day traders.
The Aave DAO and Curve Tokens
The Aave DAO, the governing entity behind the Aave lending protocol, has recently greenlit the acquisition of $2 million in Curve (CRV) tokens. This move was triggered by the protocol’s exposure to Curve’s unfortunate hack. The decision is aimed at bolstering the DeFi ecosystem and strategically positioning the Aave DAO in the ongoing Curve wars, ultimately benefiting secondary GHO liquidity.
AAVE Holders and Market Response
Despite this significant development, which could potentially alter the protocol’s future direction, AAVE token holders seem unimpressed. Analysis of trading activity over the past 24 hours shows a persistent negative sentiment and a decline in accumulation pressure. This lack of interest in governance tokens actually predates the Curve hack.
According to IntoTheBlock data, AAVE’s network activity has been on the decline since June’s end. Daily active addresses trading the altcoin have dropped by a whopping 94%. Similarly, the creation of new addresses has also plummeted, indicating a 14% drop in new demand for AAVE.
Whale Activity and In/Out of the Money Metric
As interest in AAVE diminished, so did whale activity. Large transactions exceeding $100,000 have decreased by 94% since 23 June. With a steady drop in value and token accumulation, many AAVE holders find themselves ‘out of money’, as per IntoTheBlock’s In/Out of the Money metric. This metric measures the average price at which investors purchased tokens, comparing it with the asset’s current market value. If the current price is lower than the average cost, the holder is ‘out of money’, holding at a loss. At present, 78.48% of all AAVE holders fall into this category.
For day traders, AAVE accumulation has slowed down. Key momentum indicators remain below their respective neutral lines, suggesting that selling pressure is outweighing buying momentum. AAVE’s Aroon indicator, at 21.43%, shows that the token’s most recent high was achieved quite some time ago.
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