AAVE is making headlines again as the token extends its rally, buoyed by strong fundamentals and bullish technical signals. The decentralized finance leader has reached its highest price since early February, and all signs point to a potential 45% surge from current levels.
This article breaks down the drivers behind AAVE’s rally, the significance of its shrinking exchange reserves, and the key technical levels that could set up the next big move.
Supply Squeeze: Exchange Balances Plummet to 2021 Lows
One of the clearest indicators of growing investor confidence is the dramatic reduction in AAVE’s exchange balances. Latest on-chain data shows just 3.17 million AAVE tokens remain on centralized exchanges, the lowest figure since February 2021. For comparison, there were 4.53 million tokens on exchanges in November 2023.
This sustained outflow signals that holders are choosing to stake, lock up, or otherwise retain their tokens, rather than sell. In crypto markets, falling exchange supply is typically viewed as a bullish sign, suggesting reduced immediate sell pressure and a more tightly held asset.
Record Network Activity and Staking Surge
AAVE’s protocol fundamentals further reinforce the bullish outlook. Total value locked (TVL) in the Aave ecosystem has soared past $26.4 billion—a gain of more than 30% in just the past month. This jump reflects higher lending, borrowing, and staking activity on the network.
Protocol revenues have also remained robust, with AAVE generating $33.8 million in fees this month, slightly up from the previous month. The staking market cap, meanwhile, has jumped to $800 million, up from $454 million last month. In terms of Ethereum (ETH), staked volume now stands at 300,000—nearly quadruple last year’s low.
Additionally, AAVE’s native stablecoin, GHO, continues to gain traction, with its market capitalization now at an all-time high of $265 million.
Technical Analysis: Golden Cross and Breakout Patterns
Technical indicators are also turning bullish. On the daily chart, AAVE has posted a strong upward trend for the past two months. Most notably, it has completed a “golden cross”—where the 50-day exponential moving average crosses above the 200-day moving average—often interpreted as a sign of long-term bullish momentum.
The Average Directional Index (ADX), which measures the strength of a trend, has surged to 42—indicating a powerful uptrend is underway. Furthermore, AAVE has broken above the key 38.2% Fibonacci retracement level from its previous cycle, increasing the likelihood of continued gains.
Based on this momentum, technical projections target the next resistance at $400, representing a potential 45% rally from the current price.
Outlook: What’s Next for AAVE?
As exchange reserves dwindle and on-chain activity intensifies, AAVE is well-positioned for further upside. The combination of robust protocol revenues, rising staking participation, and a healthy technical setup has attracted both retail and institutional attention.
- Lowest exchange balances in four years indicate strong holding sentiment.
- TVL and protocol revenues are at record highs, supporting continued network growth.
- Technical indicators favor a move to $400—a 45% increase from current prices.
With fundamentals and technicals aligned, AAVE’s latest rally may just be the beginning of a broader move, as long as current trends hold. As always, traders should monitor for any sudden shifts in exchange supply or major protocol news, but for now, the path higher remains open.
