AAVE Price Plunges 3% but Smart Money Remains Bullish

AAVE's price has taken a sharp 3% hit in the last 24 hours, dropping to $121.58. This sudden decline has led to its MACD histogram hitting zero, a key inflection point. The momentum indicator is now flatlined, making it difficult for traders to determine whether this is a bull trap or a healthy reset.

Despite the drop in price, AAVE's broader structure remains constructive. All major slow-moving averages, SMA 20 at $106.61, SMA 50 at $98.94, and SMA 200 at $96.56, are below current price, indicating that the cryptocurrency is still operating within a medium-term uptrend.

Smart money desks are 59% long, with open interest surging by 5.4%. This suggests that traders are positioning themselves for a potential breakout or continuation of the rally. The top traders and retail investors are aligned in their bullish sentiment, which historically favors follow-through rather than a washout.

Two scenarios have been outlined: Scenario A, Bull Case, where price holds the $118.53, $118.62 EMA confluence support on any retest, with an entry zone of $119.00, $120.50 and a stop below $115.49; and Scenario B, Bear Case, where the MACD zero line resolves bearish and the EMA 12 support at $118.62 gives way.