Key Takeaways
The combination of a strong Ethereum and demand for decentralized finance products in the market could be a positive feedback loop for Aave.
Aave [AAVE] reclaimed the $300 mark during this week’s trading and was likely to reach the next milestone at $400 soon. This level was also where the DeFi token saw a correction in December 2024.
On Friday, the 22nd of August, Federal Reserve Chair Jerome Powell indicated there was a possibility of rate cuts soon. This news could be good for the DeFi sector, and thereby AAVE.
The stock and crypto markets reacted bullishly. Ethereum [ETH] was just 3.1% away from its all-time high.
As the backbone of DeFi infrastructure, stronger ETH prices and cheaper borrowing costs could funnel more capital into Aave’s lending and staking markets. A DeFi revival looked possible in the months ahead.
New highs ahead, but also a warning for AAVE holders
Source: AAVE/USDT on TradingView
The weekly chart of Aave showed a bullish resurgence in progress. Early 2025 saw a deep retracement that reached below the 78.6% level, but the recovery since then has been encouraging.
The OBV made a new high in recent months compared to late 2024. This signaled increased buying pressure in 2025.
Meanwhile, the MACD was slowly climbing higher, but was not overextended and didn’t exhibit a bearish divergence yet.
The $417 and $527 resistance levels from 2021 were the next key targets to watch out for. The Fibonacci extension levels also plotted potential take-profit zones.
Profit-taking warning lights
Source: Glassnode
The risk of selling pressure was evident, as 97.4% of AAVE supply sat in profit at press time. This was a higher figure than at any point over the past 12 months, including December 2024.
Source: Glassnode
If a correction unfolds, it could be halted at the psychological round number support at $300.
The Cost Basis Distribution Heatmap gives a visualization of the supply density across price levels. Over the past two years, the $300 and $280 prices were at which sizable amounts of AAVE were acquired.
Hence, they are support levels.
To the north, there was scant supply, with $390 being a possible threat to the bulls. Overall, further gains were likely, but traders and investors should beware of selling pressure from profit-taking activity.
Next: How Ethena became the most levered bet after Fed rate cuts
