19 JAN 2022 (WED)- Aave (AAVE) Report Card

By quantdoge | Daily Crypto Risk Report | 19 Jan 2022


Investment Disclaimer:

  • I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.
  • Past performance presented here is not an indicator of future performance.
  • This post expresses my own opinion about the cryptocurrency mentioned herein and is not an offer to buy or sell, or a solicitation of any offer to buy or sell the cryptocurrency mentioned in this post.
  • I do hold a long position in AAVE as a token holder.

1. Top 3 Good News for AAVE HODLERS !!!

2. How Aave Performs Relative to Other Cryptos ?

Performance of All Cryptos Under Quantdoge Watchlist since 2021 (Sorted by % Return)

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AAVE has undergone 157.45% return from USD 88.3262 to USD 227.3947 since 01 Jan 2021. AAVE is the 26th best performing crypto assets among others here.

3. How Resilience Aave Is Towards Bitcoin Crash Relative to Other Cryptos ?

Historically, all altcoins are somewhat dependent on Bitcoin price movement and it’s often the case where if Bitcoin falls, most altcoins would follow.

Top 3 Cryptos That Are Most Resilient To Bitcoin Crash During Each of BTC 4 Largest Crashes in 2021

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AAVE has proven resilience against BTC crash in 1 out of the 4 instances.

During the last 4 BTC market crashes,
When BTC dropped by -13.47 %, AAVE returned -33.47 % at 20 May 2021,
When BTC dropped by -13.13 %, AAVE returned -19.18 % at 22 January 2021,
When BTC dropped by -12.16 %, AAVE returned 12.73 % at 13 May 2021,
When BTC dropped by -11.39 %, AAVE returned -21.36 % at 22 June 2021
           
4. Technical Analysis on Aave

4.1. Volume Weighted Average Price (VWAP)

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VWAP is a technical indicator used by a trader to gauge the overall trend of an asset price movement. VWAP line (orange line) represents the volume-weighted average price (average price here is defined as the average of high, low and close prices) while close price line (blue line) represents the price when AAVE is closed at the end of every single day. 

Whenever blue line (close price) is above orange line (VWAP), it indicates that the asset is gaining momentum and being traded higher than its average price level. This would represent a 'buy' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'sell' opportunity, anticipating that the price of AAVE (blue line) to fall to its average level (orange line).

Whenever blue line (close price) is below orange line (VWAP), it indicates that the asset is losing momentum and being traded lower than its average price level. This would represent a 'sell' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'buy' opportunity, anticipating that the price of AAVE (blue line) to rise to its average level (orange line).

As of 18 Jan 2022, VWAP is suggesting that AAVE is losing momentum and is now trading below its monthly volume weighted average price.

4.2. Moving Average Convergence Divergence (MACD)

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MACD is often used by trader as a momentum indicator. There are 2 lines that form the above charts, namely MACD (12, 26) lines and Signal(9) line, while the histogram is calculated by subtracting Signal (9) from MACD (12,26). Histogram would fall to the negative territory whenever MACD (12, 26) is trending at a lower level than Signal (9) and rise to the positive territory whenever MACD (12,26) is trending at a higher level than Signal (9).

MACD (12, 26) is computed by subtracting the 26-day exponential moving average (EMA) of AAVE closing price from its 12-day EMA. 
Signal (9) on the other hand is calculated as the 9-day EMA of MACD (12,26). 

As MACD (12, 26) goes higher away from Signal (9), it signifies that AAVE is gaining momentum and whenever it goes trends at a lower level than Signal (9),it signifies that AAVE is losing momentum. 

As of 18 Jan 2022, MACD is suggesting that AAVE is losing momentum as its price dropped.

4.3. Bollinger Band

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Bollinger band is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. Its chart made up of 4 lines, namely:

- SMA (20) (blue line), which is the 20-day simple moving average price of AAVE
- Upper Band (orange line), which is computed by adding 2 standard deviations of AAVE on SMA (20)
- Lower Band (red line) , which is computed by subtracting 2 standard deviations of AAVE from SMA (20)
- Close (green line), which is the daily closing price of AAVE

Whenever close line (green) touches the lower band (red), it indicates that AAVE is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever close line (green) touches the upper band (orange), it indicates that AAVE is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 18 Jan 2022, Bollinger Band is suggesting that AAVE is neither overbought nor oversold.

4.4. Relative Strength Index (RSI)

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Just like Bollinger Band, Relative Strength Index is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. There are 2 psychological levels, i.e. 30 and 70 in RSI. Whenever the RSI reaches 30, it indicates that AAVE is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever RSI reaches 70, it indicates that AAVE is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 18 Jan 2022, RSI is suggesting that AAVE is neither overbought nor oversold.

4.5. Price and Volume Analysis

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Aave active daily trading volume increases in earlier Jan as compared to earlier Dec last year, its short-term moving average price line (green line) is nearly crossing over its long-term moving average price line (pink line). There is a fair chance for Aave's price to move upward should this cross happening sooner.

Based on the technical analysis presented above, quantdoge holds a slight bullish view on AAVE, but I could be wrong, hence please make your careful due diligence before making any financial decision. 

5. Aave Risk Profile

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Based on the 100-day 95% historical Value-at-Risk (VaR) profile of Aave defined above, AAVE seems to trade at a similar risk level on 18 Jan 2022 as compared to 10 days before on 08 Jan 2022, with its biggest pullback being seen at -13.26% on a single day during the last 100 days.

Aave's probability distribution chart has shifted right, with lower probability of staying stagnant around 0% return range, but with higher probability of making 5% or more. However, I could be wrong, hence please make your careful due diligence before making any financial decision.

6. Price Simulation for Aave

How did quantdoge simulation perform vs the actual AAVE price movement over the last week ?

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Over the past 7 days, AAVE has been trading above the median path of all simulations but still below the 75% quantile path, indicating that AAVE is neither overbought nor oversold. 

7. AAVE Community Analytics

Number of AAVE Followers In The Last 30 Days

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In the last 30 days alone, Aave's followers have grown 3.32 % from 14,550 to 15,033 on Reddit.

Daily increment of Aave's Reddit subscribers peaked on 15 Jan 2022.

There are on average 17 new subscribers who subscribe to Aave's Reddit account daily

8. Google Trends Analytics

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Aave reached its peak in Google Search on 2021-01-31 with a Google Score of 100
Over the last quarter, Aave Google Score has increased 0.86 % from 48.25 to 48.67
Over the last 6 months, Aave Google Score has increased 12.14 % from 43.4 to 48.67

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Over the last month, aave is most saught after on Google from St. Helena, followed by Finland and Luxembourg.

Finland and Luxembourg are classified by World Bank as high-income nations, hence, a high interest from these 2 geographical regions are bullish to AAVE as their citizens are likely to have higher risk appetite and more spare cash to venture into the crypto space.

9. Developer Activity Analytics

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Fork

Fork refers to the amount of time where the Github repo of current cryptocurrency is being copied. Higher fork number could mean that this cryptocurrency project is getting more interest in the developers community who likes to explore more on the deep technical of this project.

Aave forks increased 111.11% from 207 to 437 in the past year.

Star

Star refers to the number of developers who bookmark the Github repo of current cryptocurrency. Higher star number could mean that this cryptocurrency project is getting more general interest in the developers community.

Aave stars increased 165.86% from 413 to 1,098 in the past year.

Pull Request

Pull request contributor refers to developer who has made a successful improvements/ modifications on the Github repo of this current cryptocurrency project. Higher number of pull request contributors could mean that there is a high number of commitment given by developers to this cryptocurrency project.

However, a low number also could mean that the developer community of this project applies a strict standard when it comes to code review, so only developers who have published a high quality code with highly impactful features got approved.

Aave pull request contributors stayed stagnant at 2,000 in the past year.

If you like my analysis and articles, please follow me at @quantdoge for daily updates.

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quantdoge
quantdoge

Data scientist in crypto and blockchain space.


Daily Crypto Risk Report
Daily Crypto Risk Report

This blog was created by quantdoge, a data scientist in the cryptocurrency and blockchain space to publish daily risk reports on different cryptocurrencies. All published reports in this blog were analyzed with in-house algorithmic trading and quantitative risk management technology. ** Investment disclaimer: ** I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.

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