AAVE increased last week by more than 75% to compensate for the losses of October
Binance’s CZ believes that the DeFi room is on the verge of a turning point when it comes to adoption
AAVE/USD is now likely to move to the next resistance line at $65
The Aave (AAVE) course closed over 75% higher last week in one of the most impressive performances of an old coin in recent months. The price increase came after massive declines that DeFi coins have suffered since August.
Fundamental analysis: DeFi is at a turning point to start replacing CeFi
DeFi has experienced a big boom in 2020. A number of DeFi tokens were massively adopted in the crypto community this year, thanks to intelligent contract technology and revenue farming that allows users of these tokens to gain extraordinary interest in their crypto assets.
The founder of Binance exchange, Changpeng Zhao, notes that the DeFi market is being flooded with all kinds of rental protocols that compete with each other by enabling consumers to earn quick returns.
“Today’s most promising DeFi apps all have a similar vision for the future: the creation of a divergent financial system in which capital and data flow more fairly and control is shifted away from institutions and towards the individual,” he wrote in a blog post.
Some protocols even promote double or triple-digit interest rates, as opposed to the 0.5% interest rates found in the “high-yield” traditional savings accounts. Although some of these protocols are still not sustainable, their massive emergence has certainly caused a lot of hype.
Zhao says that even the most widely used DeFi applications are still overshadowed by centralized exchanges, which still have the greatest impact on crypto space. These centralized exchanges offer users a compelling set of services that are more user-friendly.
On the other hand, decentralized finance struggles with trust issues that it must overcome to gain mass acceptance. When it comes to financial assets, consumers pay particular attention to three things – liquidity, security and stability.
These three aspects contribute to winning the trust of crypto users. While DeFi protocols are still difficult for some users to understand and access, centralized financial platforms have become more accessible and multi-dimensional in recent years. However, it seems that the DeFi space is on the verge of a turning point when it comes to deployment.
The attraction of financial self-management and decentralization is key to the original goal of block chain technology, as it is able to provide unprecedented freedom of money for all participants and create historic opportunities for its users. It is therefore very likely that DeFi represents the future of cryptography.
Technical analysis: Aave bulls return
After a massive correction, which took place in almost all DeFi-focused old coins, the return of the DeFi bulls has driven the AAVE price much higher. Last week’s gains of over 75% have single-handedly wiped out all the losses of October.
AAVE daily chart (TradingView)
In this way the bulls returned about 50% of the territory lost during the correction from August to October. They are now likely to be looking for a push towards the key 61.8% level, which is just above the $65 mark.
While centralized exchanges still have a major impact on crypto space due to the user-friendly number of services, the future of cryptos is likely to fall into the hands of decentralized financing, writes the CZ of Binance. Meanwhile, AAVE’s share price rose by over 75% last week when DeFi cops announced their return on a large scale.