AAVE traders caught in dilemma should take a look at these metrics for clarity

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The pres­ence of the AAVE pro­to­col and token in the DeFi space has been promi­nent since its launch. And, with its third iter­a­tion, AAVE has cement­ed itself as a top lend­ing protocol. 

Regard­less, its native token is yet to out­per­form its coun­ter­parts. At press time, AAVE was the #50 biggest cryp­tocur­ren­cy in the world by mar­ket cap.

AAVE goes down just when it goes up

A ral­ly worth 34.45% is good enough for any asset to restore its investors’ faith. But when the same hap­pened in the case of AAVE, the alt­coin trig­gered investors to dou­ble down on their bull­ish­ness result­ing in high liq­ui­da­tions and sud­den sell­ing with­in 24 hours.

AAVE price action | Source: Trad­ingView – AMBCrypto

At the time of writ­ing, 350k AAVE worth over $23.1 mil­lion was cumu­la­tive­ly received by cryp­tocur­ren­cy exchanges’ wal­lets. How­ev­er, this is not what deter­mined AAVE’s worst day in history. 

It was the des­per­a­tion of the investors that led to it.

AAVE investors’ sell­ing | Source: San­ti­ment – AMBCrypto

The net­work-wide sup­ply of AAVE shows that the total assets that moved around in the last 24 hours of 21 June were moved at a loss. the cur­rent trad­ing price of $66 was far low­er than the price they were bought at. 

This result­ed in $114 mil­lion worth of sup­ply sit­ting at a loss in aggre­gate, the high­est ever reg­is­tered fig­ure in the his­to­ry of AAVE.

AAVE sup­ply at a loss | Source: San­ti­ment – AMBCrypto

Fur­ther back­ing the investors’ des­per­a­tion was the fact that AAVE’s Long Term Hold­ers (LTHs) and loy­al­ists moved their hold­ings around. 

Addi­tion­al­ly, investors who had held on to their AAVE for more than a year out of the fear of addi­tion­al loss­es decid­ed to shift it around. Con­se­quent­ly, con­sum­ing more than 162.45 mil­lion days, the sec­ond-high­est ever. 

AAVE LTH sell­ing | Source: San­ti­ment – AMBCrypto

All in all, these three instances are proof that AAVE hold­ers aren’t here for the long-term game. They are more like­ly to exit their posi­tion at the first sign of prof­its- just the way they did on 21 June.

Time to move on to AAVE V3?

The AAVE token has not affect­ed AAVE V3 since the pro­to­col is doing pret­ty well. The total num­ber of trans­ac­tions per­tain­ing to bor­row­ing, although have been low­er than deposits, has only been increasing. 

In the Poly­gon and Opti­mism mar­kets, V3 has not­ed a suc­cess­ful increase in its demand.

AAVE deposits and with­draw­al | Source: Dune – AMBCrypto

As long as AAVE v3 con­tin­ues to show steady growth, the AAVE pro­to­col and token will man­age to sur­vive even if investors refrain from back­ing it.

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