Venture capitalist Arthur Cheong believes that one decentralized finance (DeFi) altcoin may be gearing up for a massive breakout.
The DeFiance Capital CEO tells his 176,400 followers on the social media platform X that several factors are signaling bullishness for lending platform Aave (AAVE).
He suggests Aave’s open interest (OI), which is the total number of outstanding derivatives contracts for a given asset, may have bottomed after a large decline in the last month.
“AAVE price is holding up very well despite the leverage flush on the perps over the past few weeks:
1. Open Interest at 30 days low, dropped by 50% compared to September 11th.
2. Funding rate negative.
Set it up very well for the next leg of rally.”
A negative funding rate means there are more short positions than long positions on AAVE, which some traders perceive to be a bullish indicator.
He also suggests that that Former President Donald Trump using Aave for the launch of World Liberty Financial, his new DeFi crypto project, may be a bullish catalyst.
“If you tell me in 2020 we will have a former and potential future President of the USA supporting the launch of a separate instance on Aave, even the biggest DeFi bull wouldn’t believe it. But here we are. ‘We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.'”
Last month, he said Aave appeared to be breaking out of a multi-year consolidation pattern on the weekly timeframe.
“AAVE is trading at the highest level since May 2022 and seems to be breaking out from a two-year consolidation pattern. Expect ATH (all-time high) reclaim to further solidify DeFi Renaissance.”
Aave is trading for $148.88 at time of writing, up 7.4% in the last 24 hours.