AAVE Crashes Despite Network Boom

The price of AAVE, the native token of the Aave protocol, continued to slide this week, falling to its lowest point since late June. The cryptocurrency has now declined by 23% from its July peak of $337, officially entering a localized bear trend despite the protocol’s notable growth and activity.

Robust Ecosystem Growth Amid Price Weakness

While AAVE’s market price has dropped significantly, the broader Aave ecosystem is thriving. Aave remains the largest decentralized finance (DeFi) lending platform in the market. According to data from DeFi Llama, the total value locked (TVL) on the Aave protocol surged to a record $35 billion this week—an impressive increase from $21 billion at the beginning of the year.

A significant contributor to this growth is the protocol’s integration with Ethena, a rising force in the DeFi landscape. Ethena’s assets have rapidly expanded, climbing to nearly $5 billion, with over $1 billion added in just the last two days, according to Dune Analytics.

This surge in usage has translated into a sharp rise in fee generation. Aave has earned more than $783 million in fees over the past year. Its annualized earnings now stand at $47 million, and the platform’s total revenue has surpassed $110 million, underscoring strong financial fundamentals.

TokenTerminal data further reinforces Aave’s positive momentum. Net deposits increased by 21% in July, and active loans grew by 25%, reaching $20.5 billion. In addition, the platform’s monthly fee intake rose by 49%, while revenue soared by 85%—clear signs of growing demand and user activity.

Rising Competition in the DeFi Lending Space

Despite these encouraging numbers, Aave is operating in a fast-evolving and increasingly competitive environment. Rival protocols such as Morpho, Compound Finance, and Maple Finance have been gaining traction, intensifying the battle for market share in decentralized lending.

This competition, coupled with a broader downturn across crypto markets, may be contributing to AAVE’s continued price drop. While the underlying business remains robust, investor sentiment appears more tightly linked to short-term technical indicators and market trends.

Technical Outlook: Reaching a Critical Juncture

From a technical perspective, AAVE’s price has been in consistent decline since hitting its July high of $337.25. The current price action shows the token trading below both the 50-day and 100-day Exponential Moving Averages (EMAs), signaling bearish momentum. Additionally, the Relative Strength Index (RSI) is nearing the oversold threshold, suggesting a potential shift in market sentiment.

AAVE is also hovering around a key ascending trendline that connects the token’s higher lows since early April. This trendline could act as a crucial support level. If the price manages to hold here, it may trigger a short-term rebound toward the Murrey Math Lines resistance around $312. However, if this support breaks, it would likely invalidate any bullish recovery scenario and suggest deeper losses ahead.

What to Watch

While AAVE’s price may be faltering, the protocol’s operational performance tells a different story—one of resilience and expansion. Investors will be watching closely to see whether technical support holds and whether Aave can maintain its momentum in the face of stiffening competition and wider market pressures.

Prediction: Unless the current downtrend breaks, AAVE may continue to test support near $250. A bounce from the trendline could reintroduce bullish potential, but caution remains warranted in the near term.