As Aave [AAVE] continues its sharp decline, it appears that some long-term investors are capitulating. According to Lookonchain, an institutional investor became active again after a year and moved 156,690 AAVE, worth $22.86 million, possibly to sell.
So far, the intestor has deposited 62,000 AAVE worth $9.12 million into exchanges. This is a significant amount of AAVE moving into exchanges and could mean two things: either an exit or a portfolio reshuffle.
If the tokens are sold, they could put significant downside pressure on AAVE, especially now that it is in a sharp decline.
In addition to the reported exchange deposits, the supply of AAVE held on exchanges has continued to rise.
A look at the Exchange Supply Ratio (ESR) shows it rose to a three-week high of 0.1615 as of writing. The rising ESR reflects that more AAVE is now being held on exchanges.
Typically, this increases the amount of tokens available for selling, signaling greater potential selling pressure. With AAVE declining, this positioning suggests market uncertainty, with traders potentially preparing to sell or hedge.
Amid the broader market pullback, AAVE remains stuck in a strong downtrend. Since facing rejection at $187 nearly three weeks ago, the altcoin has mostly closed at lower lows, with occasional upticks.
The downtrend intensified two days ago after AAVE lost the $160 support level, prompting the altcoin to drop from around $150 to a low of $141.
A look at momentum indicators further supports this bearish outlook. For starters, the altcoin’s Relative Strength Index (RSI) fell below 40 as of writing, dropping to 38 and edging deeper into bearish territory as it neared oversold levels.
At 38, the RSI indicates that bearish momentum is prevailing in the market. Likewise, the MACD has been on a downward trajectory since forming a bearish crossover weeks ago.
As a result, the MACD moved into negative territory, further supporting the bearish outlook. Taken together, these two indicators suggest that downside pressure remains strong and the current trend could continue.
Therefore, if selling activity persists, the altcoin is likely to lose its $140 support and fall to $132. To invalidate this bearish setup, AAVE needs a daily close above $155.