The recent retracement in the crypto market has affected almost all cryptocurrencies including DeFi giants such as Aave. The latter is the leading decentralized exchange with roughly $14.98 billion worth of total value locked in but it has been bearish for the last 7 days.

Aave is currently trading at $359.69 and it is down by 0.62% in the last 24 hours and its 7-day performance indicates that it shed roughly 12.39% of its value. Nevertheless, its current performance is still significantly better than its July performance which bottomed out at $212. On the other end of the spectrum, it is significantly discounted compared to its all-time high of $668 which it achieved at the peak of the last major bull run in May.

Source: Binance

Why AAVE is currently attractive

The recent dip which was caused by capital outflows and panic selling provided the cooling that AAVE needed after the impressive gains it registered since July 21. However, it is now back in the oversold zone according to the RSI and the selling volume seems to have tapered off. The technicals therefore point towards the strong potential for another rally within the next few days assuming that the market will be favorable.

Meanwhile, the dip affected the top cryptocurrencies and the current price levels present a chance for more accumulation. Another strong catalyst might kick off the next rally which might lead to AAVE soaring some more. However, there is also the likelihood that another negative shock may continue pushing prices down, thus investors should exercise caution.

DeFi platforms will likely be heavily targeted by the regulatory measures that U.S regulators have been trying to implement through the infrastructure bill, hence this is something to keep in mind for when the U.S Senate returns from recess. Further regulatory pressure will likely wipe out some of the gains that AAVE and other DeFi players have achieved.

Short-term and long-term outlook

AAVE’s short-term outlook might be favorable especially if the market bulls resume. The bull run is expected to peak in mid-September, which means there are likely a few more days of bullishness if there will not be other FUD-inducing developments between now and then. AAVE’s outlook especially in the long-term is also favorable thanks to the robust adoption that has been taking place.

The DeFi platform recently reported that it entered into a $180 million DeFi incentive plan with Avalanche, and the deal is supposed to encourage more participation and deliver more value. Other developments that might fuel more growth include the development of a mobile version of AAVE which will make the platform accessible to a wider demographic.

AAVE has also been increasing its listings with new high-quality cryptocurrencies such as GHST and even the DeFi Pulse Index (DPI) among others. The platform recently announced a new proposal to test cross-chain governance, a move that is aimed at evaluating cross-chain bridges and making sure they are in the best condition. Aave also recently launched a new UI kit that will introduce more convenience for developers while encouraging community participation. The developments highlight AAVE’s strong commitment to maintaining a high-quality DeFi platform while also laying the foundation for strong growth moving forward.