AAVE (AAVE) Token Is in an Accumulation Phase, But Can It Break Out of Its Narrow Trading Range?

AAVE (AAVE) was trading at $97.75 on Thursday, Aug. 8, up by 100% from its lowest point in 2022 but much lower from its all-time high of $708.

AAVE (AAVE) price has remained in a two-year consolidation phase, but some analysts believe that it could be ripe for a breakout as some technical indicators show accumulation.

AAVE price action in detail

AAVE’s recent gains come as the market seems to be waking up to the network’s popularity and profitability. Data from DeFi Llama shows that AAVE is the third-biggest player in the decentralized finance (DeFi) industry with over $10.7 billion in assets.

It also generates substantial fees, being the third most-profitable DeFi platform and having generated over $222 million in fees this year. AAVE makes most of its money from the interest rate spread between what it pays to lenders and what it charges its borrowers. It also makes money through flash loans and liquidation fees.

Some analysts are bullish on AAVE due to the ongoing accumulation. In an X post, Michael van de Poppe, a popular X analyst, highlighted AAVE’s weekly chart as one of the most promising in the crypto industry.

One of the most promising charts in crypto is $AAVE.

DeFi is looking awesome for a big run. pic.twitter.com/3oNylMixNv

This view was shared by several other analysts, including Otsukimi, who pointed to the ongoing accumulation and the fact that the Relative Strength Index (RSI) has risen above the neutral point of 50.

$AAVE

Not the best looking weekly chart, but not that bad either.

One that I'm keeping my eye on if it ever reclaims this level.

Current candle looks great, RSI holding as well.

High bullish cross at 75% is usually hopeful. pic.twitter.com/QJxOX7tzQF

Other analysts cited additional reasons for their bullish outlook on AAVE. Dalin Anderson suggested that the token was in the process of forming an impulse wave of the Elliot Wave pattern. This pattern has five phases, with the third one being the most bullish.

A possible catalyst for AAVE is that there are signs that whales have been accumulating the token in the past few months. Last week, a whale reportedly accumulated AAVE tokens to the tune of over $6.47 million in a two-day period.

The accumulation concept has worked well among other cryptocurrencies in the past. Shiba Inu (SHIB) stayed in two prolonged consolidation phases in 2021 and in 2022 and 2023. Each of them resulted in a strong bullish breakout.

Risks to the bullish AAVE thesis

The main risk to the bullish thesis is that the two-year consolidation phase could continue for a few more months or even years.

Moreover, there are technical signs that the token has formed a rising wedge and a bearish pennant chart pattern. In most cases, these patterns lead to a bearish breakout, especially when the two trendlines come close to converging, like they are about to do.