Ethereum News Today: AAVE Faces $270 Retracement as $1.7B Liquidity Outflows Trigger Market Scrutiny

AAVE appears poised for a short-term pullback ahead of a potential upward trajectory, according to recent analysis by cryptocurrency strategist Ali Martinez. The prediction, rooted in Fibonacci retracement levels, suggests the token could decline to $270 before resuming bullish momentum toward $560. Martinez highlighted the emergence of a TD Sequential “9” pattern on the 3-day chart, a technical indicator often signaling a local peak and subsequent retracement [1]. This correction, if realized, would position AAVE within a “reload zone” at the 0.5 Fib level, offering a strategic entry point for buyers [1]. The analyst emphasized that a sustained break above $300 could reignite the token’s advance toward its prior high of $338.77, but failure to hold critical support at $283.40 could trigger a further decline to $213.25 [2].

Simultaneously, Aave’s Ethereum liquidity has faced significant outflows, with $1.7 billion withdrawn over the past week. A significant portion of these withdrawals is linked to crypto entrepreneur Justin Sun, whose associated wallets moved over $646 million in ETH. Marc Zeller, a contributor to the Aave protocol, attributed much of the activity to Sun, who has also seen HTX—his advisory firm—withdraw $455 million in ETH, while Abraxas Capital Management removed $115 million [3]. Despite the outflows, Sun-linked addresses still hold approximately $80 million in ETH on Aave. The sudden liquidity shift has raised questions within the DeFi community about potential market-moving strategies, though Zeller noted the activity aligns with Sun’s history of large-scale crypto transactions [3].

From a technical perspective, AAVE’s recent performance reflects weakening momentum. As of July 24, the token trades at $288.65, down 0.60% in 24 hours, with its Relative Strength Index (RSI) at 45.40—indicating reduced buying pressure [2]. Volume has slightly declined, suggesting cautious sentiment among traders. The token’s inability to hold above $300 has intensified focus on key support levels, particularly $283.40, where a defense could stabilize the short-term correction [2].

The interplay between technical signals and on-chain activity underscores Aave’s precarious positioning. While Martinez’s forecast offers a bullish outlook contingent on a successful rebound from $270, the broader market’s reaction to major Ethereum withdrawals remains uncertain. Investors are advised to monitor both technical levels and liquidity shifts as they could influence AAVE’s path forward.

Source: [1] [AAVE Set for Correction Before Eyeing $560, Says Analyst] [https://coinmarketcap.com/community/articles/688233a33e230565571b9c4c/] [2] [AAVE Faces Key Technical Test Below $300] [https://coinmarketcap.com/community/articles/688233a33e230565571b9c4c/] [3] [Justin Sun-Linked Wallets Behind Massive Aave Withdrawals] [https://coinmarketcap.com/community/articles/688233a33e230565571b9c4c/]