Traditional finance is prone to faults and errors. The Gamestop scandal was the perfect example of why people are looking for decentralized alternatives. The DeFi space bridges how people perceive finance and give more power to small-time users. Aave DeFi managed to gain popularity and prove to be a solid platform. From a good-looking platform to good yield returns…it seems like Aave got it all. With the recent crypto market adjustment, investors are flocking the market to look for those undervalued projects. Why is Aave DeFi a good investment?
1- The DeFi space is still in its Infancy
When the DeFi industry made its first appearance, many people did not understand it. Why would someone get a loan in cryptos? Why would anyone pay high lending fees? And most importantly, why would anyone place a collateral of 1:1 for a loan? Well, the answer is not pretty straightforward for the average Joe. In fact, the ability to get a blazing fast approval on a loan and get it instantly is not the only plus side of the DeFi space.
Today, most entities who apply for loans are crypto exchanges and crypto companies. They basically seek liquidity in order to provide “short-selling” and instant buy/sell orders. This liquidity need is quickly and instantly fulfilled thanks to DeFi companies, who reward users who help in creating those liquidity pools. Later, many other use cases will flourish and create a bigger need for such industries.
Successful investors spot growing businesses and invest in them today rather than later when they are well-established. For the case of Aave, it is a strong DeFi platform that is still growing, hence a good investment.
2- AAVE’s Technical formation is a great entry price
The project ticker was previously called LEND and switched to AAVE at a rate of 100 LEND per 1 AAVE. At today’s current prices, AAVE stands at around USD 385.53. Its market capitalization is around USD 5 Billion. Other than those quick stats, looking at AAVE’s technical formation in figure 1 shows a strong buy potential. In fact, the USD 300 area is a very strong support level, where prices always retraced back upwards. Currently, prices confirmed a reflection upwards, and specifically after a market crash. This is a strong signal for a buy position with a stop loss of around USD 300. Your first take profit can be around USD 470 and the second one around USD 500.
3- The whole Crypto Market is getting back up
It is no secret that when the top 10 cryptos are down, the whole market is down. AAVE is #26 as the largest cryptocurrency by market capitalization and is considered a veteran in the DeFi space. It is apparent that when there is bad news in the crypto market, ALL cryptocurrencies become lower in value, as investors sit on the sidelines waiting for resolutions. This is true for all markets, even the stock market. When a country or economy is doing bad, its related companies will become lower-valued because investors tend to sit on the sidelines, while others rush to sell from fear.
For the case of Aave, prices are picking up and the DeFi space is definitely going to get better and stronger. This is true especially that the crypto market is getting out of a recent crash, so prices should adjust back up to prices highs.
Conclusion
Aave is definitely worth looking into. The DeFi space is growing, and this alone should let investors notice this project. Prices might still readjust in the short term, but if the crypto market goes back on track, there is no stopping for Aave. Today, many countries are noticing DeFi projects and already started to impose regulations, which is a good thing as governments are acknowledging those entities officially. We await to see what happened in the near future with the crypto market, and specifically to Aave.
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Rudy Fares
