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$AAVE declined for the second consecutive week, mirroring the performance of most altcoins as tariff risks remained a concern.
$AAVE ($AAVE) token fell to a low of $196.4, its lowest level since November 25, and is currently 50% below its highest level this year.
The token has a few catalysts that may push it to its all-time high of $666, up by 170% from the current level.
First, there are signs of increased accumulation by investors. Coinglass data shows that $AAVE’s balances on exchanges have crashed to the lowest level in years. These balances moved to 2.2 million on Friday, down from 2.67 million in December.
A significant drop in exchange balances suggests that investors are holding their tokens rather than selling, which is a positive indicator. In contrast, rising balances often indicate selling pressure, as investors move their holdings from self-custody to exchanges to sell.
Second, $AAVE is still the biggest lending and borrowing protocol in the crypto industry, with about $20 billion in assets. It is also one of the most profitable as the annualized fees has jumped to over $721 million. TokenTerminal data shows that it has made over $103 million in fees this year.
Notably, $AAVE successfully handled over $201 million in liquidations on Monday as cryptocurrency prices dropped. Despite the substantial liquidations, no bad debt was accrued to $AAVE, and total bad debt fell by 2.7%.
Amid significant market volatility, @aave successfully processed $210 million in liquidations while maintaining zero additional bad debt.
— Chaos Labs (@chaos_labs) February 3, 2025
Here’s a breakdown of the key insights: 🧵👇
$AAVE’s network is also expanding. More than 440 million USDS stablecoins have been deposited into the network. Additionally, $AAVE has moved to Base, the blockchain network owned by Coinbase, and a vote is underway to activate it on Linea.
$AAVE price forecast
$AAVE’s price has strong technical indicators that suggest a potential rally in the coming months. It has formed a cup and handle chart pattern, with the upper boundary at $400. The recent pullback is part of the handle formation, which is typically followed by a strong rebound.
$AAVE has also formed a small hammer candlestick pattern, signaling that the handle phase may be ending, which could lead to further gains. The depth of the cup is about 90%, and measuring the same distance from the upper boundary suggests that the coin could surge to $765 in the long term, a 200% increase from its current level.