After struggling to find a directional foothold over the past few days, AAVE’s price action has finally broken downside resistance. The move comes after the protocol announced the launch of a new liquidity mining program for Optimism.
Announcements about Optimism’s liquidity mining plans could prompt investor sentiment to turn bullish. This is because Optimism is one of the most popular Ethereum Layer 2 scaling solutions, facilitating large volumes.
According to its website, Optimism has an on-chain value of over $800 million. In fact, it also claims to have helped save more than $1 billion in gas bills.
This @OptimismFND Liquidity mining plan is launched on Aave V3
The program will run for 90 days, distributing 5M OP to Optimism Market users of the Aave protocol
Claiming support rewards will go live soon!
Feeling optimistic 👻
— Aave (@AaveAave) August 4, 2022
Price Action of AAVE
The impact on AAVE’s price action means that investors expect the move to boost demand for the cryptocurrency. Although AAVE managed to break above its downside resistance, it should still deal with friction in its price range close to $101 at press time.
This is because the same level showed resistance in the second half of July.
AAVE’s rise over the past 24 hours is due to the buying pressure that has been building up since Aug. 2. This is about the same time that MFI turned around due to accumulation, as did RSI. However, it is unclear whether the latest uptick will last.
Unless the market manages to maintain its favorable bullish sentiment, AAVE’s current bullish performance is likely to be short-lived. This is because the supply held by the top address metric has dropped by 0.41% in the past 24 hours, indicating that whales have been cashing out.
This increase was also supported by a small increase in active addresses compared to the previous peak in addresses on August 3.
The number of whale transactions on AAVE has also increased over the past two days, supporting the latest uptrend.
However, whale transactions have been within the average daily volume. Nothing out of the ordinary in terms of buying pressure.
While AAVE’s price rise reflects an optimistic statement, its on-chain metrics explain the lack of strong momentum. Therefore, its short-term upside may be limited.