Aerodrome [$AERO] was down by more than 10% in the past 24 hours as of writing, as the broader crypto market declined by 1.45%. This decline follows an uptrend that began on the 2nd of September.
From the market structure, this drop appears to be a correction. Here are some of the factors that accelerated the drop and why it may be nearing its end.
Liquidity drained from Base Chain
First, there was market-wide profit-taking in crypto after a week of uninterrupted rallies with small pullbacks, which spread to $AERO. This offloading was evident as DEX volume surpassed $600 million when $AERO traded around $0.68.
Over the past three days, DEX volumes have stayed above $500 million while the price crashed.
Additionally, there was capital flight from Base Chain coins like Hunter Biden’s Laptop [LAPTOP]. Memecoin was launched at $200 per token, but it has since crashed and is now trading at $0.826.
This token drained a lot of liquidity due to high selling. In fact, Hunter Biden reinforced this view, citing,
The reality is that available liquidity could not sustain the strong level of interest at launch.
With Aerodrome as the primary liquidity engine for Coinbase’s Base Chain, it experienced a significant impact.
$AERO’s market structure outlook
That is not all there is.
The technical outlook also put the altcoin under selling pressure. After a week-long uptrend, $AERO entered a correction phase.
But that could be about to end. $AERO was trading above the previous higher high (HH) at $0.55, which is now a support level that is yet to hold.
The potential to hold is backed by capital flows that are shifting direction. At press time, the Chaikin Money Flow (CMF) has bounced from the neutral level and trades at 0.05. This small capital inflow is reinforced by the Chandelier Exit indicator, which has a bullish crossover.
If bulls at $0.55 succeed in defending the zone, $AERO could bounce back to the $0.68 level. This would represent 22% gains. A breakdown of the zone would see the altcoin test demand at levels of $0.52, $0.50, $0.48, $0.45, or lower.
The catch!
While the entire market was retracing, Aerodrome PGF rolled out a buyback program. The program acquired and locked 171K $AERO, worth about $100K, as part of its market-aware buybacks.
This move could mitigate the selling pressure the token is experiencing. But it is worth noting that the buyback volume is minimal compared to the selling pressure in the whole crypto market at the moment.
Final Summary
- $AERO crashes more than 10% as Base Chain’s primary liquidity engine, Aerodrome, drains liquidity.
- $AERO was in a correction phase, but its price action is now retesting the previous higher high at $0.55.