Venture capitalist Arthur Cheong believes one decentralized finance (DeFi) altcoin could be ready for a major breakout.
The DeFiance Capital CEO tells his 176,400 followers on social media platform
He suggests that Aave’s open interest (OI), the total number of outstanding derivatives contracts for a particular asset, may have bottomed out after a significant decline last month.
“Despite the leverage flush on the culprit over the past few weeks, AAVE price is holding up very well.
1. Open interest is at a 30-day low, down 50% from September 11th.
2. The funding ratio is negative.
Be well prepared for the next rally.”
A negative funding ratio means there are more short positions than long positions in AAVE, which some traders perceive as a bullish indicator.
He also suggests that former President Donald Trump’s use of Aave for the launch of his new DeFi cryptocurrency project, World Liberty Financial, could be a catalyst for optimism.
“If in 2020 a former and potential future president of the United States said he supported launching separate instances on Aave, not even the biggest DeFi bull would believe it. But here it is. ‘We tend to overestimate the effectiveness of technology in the short term and underestimate it in the long term.’”
Last month, he said Aave appeared to be breaking away from a multi-year pattern of consolidation on a weekly basis.
“AAVE is trading at its highest level since May 2022 and appears to be breaking out of a two-year consolidation pattern. We look forward to an all-time high in ATH recovery to further solidify the DeFi renaissance.”
Aave is trading at $148.88 at the time of this writing, up 7.4% in the last 24 hours.
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