Aave hovered near its three-week high on Tuesday, helped by the prospects of its foray into the mainstream through the launch of an institutional lending platform.
Fundamentals
Dubbed as Aave Pro, the platform expects to become a “permissioned liquidity protocol” by offering institutions, corporates and fintech clients access to decentralized finance (DeFi). That said, it would follow strict regulations while onboarding participants, ensuring that their Ethereum addresses are safe-listed following a thorough Know Your Customer process.
“We will have different kinds of permissioned markets so that DeFi will be more layered and tailored to specific needs,” Stani Kulechov, founder and CEO of Aave, said during the online discussion event “Next Steps for Institutional DeFi.”
“The ability to whitelisting and blacklisting addresses would make it easier to scale institutions because it lowers the risk.”
Aave Pro will go live in July with liquidity pools of Bitcoin (BTC), Ether (ETH), USD Coin (USDC) and its own token, Aave.
What people have yet to appreciate about Aave and Compound's institutional products is that having doxxed institutional clients gives them an easy way to move into undercollateralized lending and credit markets.
— Noah Goldberg (@TraderNoah) July 4, 2021
Bulls responded positively to Aave’s institutional adoption. As soon as the rumor went live on Sunday, the AAVE/USD exchange started trending upward, insomuch that it crossed $344 for the first time since June 14. At its second-quarter low, the pair was changing hands for approximately $165 — that marks a 108% jump.
The massive upside move also took cues from a market-wide retracement trend. Bitcoin, the world’s leading cryptocurrency by market capitalization, climbed approximately 25% after bottoming out at $28,600 on June 22. The same date saw AAVE/USD falling to $165, which later led to a 108% bullish correction.
Bitcoin trends typically prompt alternative cryptocurrencies, including Aave, to move in the same direction. Nevertheless, Aave’s bias in the previous five days was consistently skewed to the upside, while Bitcoin struggled to maintain support above $35,000. That could have been due to Aave having better interim fundamentals than its top digital asset rival.
Scott Melker, the author of the crypto-focused “Wolf Den” newsletter, noted Aave attracting massive capital inflows from the Bitcoin market via liquid instrument AAVE/BTC. As a result, the pair grew 74.75% to reach 9,800 sats this Tuesday after finding support at 5,608 sats on June 27.
Melker’s setup envisioned AAVE/BTC above 10,000 sats.
Technicals
Technically, AAVE/USD appeared in a flying zone after breaking out of a bullish pattern.
The pair earlier fluctuated between two converging trendlines that together formed a falling wedge structure. Falling Wedges begin wide at the top but contract as the price moves lower. Their bullish confirmation comes only after the price breaks above the resistance trendline in a convincing fashion, with higher volumes.
In doing so, Falling Wedges’ price breakouts set profit-target above by as much as the maximum height between their upper and lower trendlines.
Aave’s recent price action fits the falling wedge description so far. The cryptocurrency is now in a breakout stage while eyeing $542 as its profit target.
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