LEND Jumps Another 11% on Bloody Crypto Day; Correction Ahead?
Decentralized finance asset LEND continued its gravity-defying price rally ahead of the New York opening bell Wednesday even as its peers across the crypto space suffered sizeable intraday losses.
The 21st-largest cryptocurrency surged 11.28 percent to $0.858 per token, its highest level to this date. Its upside move followed a four-week winning streak, wherein LEND/USD rallied from 0.369 to 0.858. That amounts to a circa 210 percent price jump.
Aave continues its parabolic bull run. Source: TradingView.com
Zooming out on the LEND/USD weekly chart revealed a significant uptrend in play. The pair jumped by as much as 29,422 percent after bottoming out at 0.003 in mid-August 2019. A major portion of those gains came after March 2020, amounting to more than 80 percent of the total upside move.
It is the same period that saw a significant boom in the decentralized finance (or DeFi) sector. Almost all tokens that played a critical role in managing the finances of decentralized lending–as well as staking and oracle platforms–delivered skyrocketing gains.
B(LEND) of Good News
LEND surged as it served as a governance token for Aave, an open-source and non-custodial protocol that “enables users to earn interest on deposits and borrow assets with a variable or stable interest rate.”
The hype later transformed into a genuine exploration of product-backed return of investments. In July 2020, Aave announced native Credit Delegation, a service that allows LEND depositors to delegate their credit lines. Data aggregator Messari commented:
“Overcollateralized lending is capital inefficient, and uncollateralized lending has been one of the key missing pieces to DeFi lending. Assuming it works it has the potential to significantly scale DeFi lending and could underpin many novel lending arrangements, leveraging Aave as a global source of capital.”
How Aave's Credit Delegation works. Source: Aave
The new features helped Aave to turn speculators into long-term LEND holders. That played a massive role in subsidizing token’s bearish risks. Meanwhile, Aave’s growth as a DeFi project kept attracting fresh higher bids for LEND, leading the total value locked into its reserves to a record high of $1.5 billion – also the highest among DeFi reserve pools.
More uplifting news came from the Financial Conduct Authority this week. The UK’s financial regulator granted Aave the license to operate as a money services business. That marked a DeFi platform’s first significant approval on regulatory standards.
The news started a new wave of buying sentiment in the Aave market.
Despite its massive rally, LEND risked correcting lower due to its technically overbought bias. The Aave token’s daily Relative Strength Index flashed a reading way above 70, a level that separates an asset from its neutral sentiment.
Aave levels to watch in the coming sessions. Source: TradingView.com
Putting a Fibonacci retracement graph on the LEND/USD weekly chart showed the levels that the pair could test moving forward. An overbought RSI suggested an imminent correction, which may lead the pair lower towards $0.58 on profit-taking sentiment.
Meanwhile, a continuation in the Aave token’s uptrend pointed to $0.94 as the next primary bull target. A further move could also put the cryptocurrency en route to a dollar valuation.