Key Takeaways
AERO surged by more than 23% in a day, with its price breaking above a key level on the weekly charts. Derivative traders have been increasing leverage in their positions, and this could be detrimental.
Aerodrome Finance (AERO) is in the news today after it rose by 23% in just 24 hours. In fact, the prices of most altcoins with utility skyrocketed over the same period, with OKB leading this charge. It was followed by AERO, with the latter reclaiming its $1 billion capitalization and cementing its position among the market’s top-100 coins.
AERO’s daily volume exploded by 276%, clocking figures of $656 million at the time of writing.
It’s worth asking the question though – What’s behind this surge and will the uptrend sustain itself on the back of rising on-chain metrics?
Factors dictating AERO’s price surge
For starters, base migration and whale activity have played a significant role in triggering the altcoin’s latest price hike. Increasing optimism around a possible altcoin season has helped too.
More than 100 projects now eye a launch on its DEX after it became the choice for Coinbase’s new Base network trading. AERO’s AMM will serve as the central liquidity hub on Base chain. This, despite AERO trailing as far as depth and routing share are concerned.
That’s not all though as AERO’s whales have been staking and accumulating hard too. As a result, exchange reserves have been dropping – A sign of falling supply across the open market.
Source: IntoTheBlock
According to IntoTheBlock’s data, the transaction volume in USD by size was the highest in the range between the $10K and $10M valuations. The cumulative amount grew from $270 million AERO in early June to about $1.30 billion.
In fact, whales accumulating between $100K and $1M worth of tokens increased their holdings by more than 161%.
AERO’s price clears its weekly highs
The altcoin’s price has been breaking above its historical highs, with the previous week seeing the crypto breach the $1-level. The level was retested by this week’s candle tail.
AERO is now eyeing $2, but the bearish orderblock at the $1.50 to $1.60 zone needs to be cleared first. Otherwise, the price could fail to hit this projection.
Source: TradingView
A correction to $1 can be anticipated as whales might take their profit to provide liquidity. This risk, together with leverage, could be a threat to AERO’s momentum on the charts.
All the risk from high leverage orders
Leverage is a double-edge sword. It amplifies gains and losses. AERO’s derivative traders have been gradually increasing their leverage since the price broke above $1.
The risk heightened after the altcoin hit $1.23. Only 50x leveraged orders were between $1.30 and $1.34 – A sign of overconfidence in AERO’s sustained momentum.
Worth pointing though that cumulative long liquidation leverage was almost 3x that of shorts.
Source: Coinglass
These longs might pose a threat as they existed below the price. For further advances, the price has to fill these orders. This might result in a dip that could go as far as $1.
The most significant level below the price was at $1.25 ,with more than $250K in liquidity.
Source: Coinglass
On the contrary, there were very few short orders above the price. Therefore, AERO’s chances of a short squeeze to advance higher appeared to be greatly reduced.
