AAVE Falls 10% as Derivatives Stay Calm and Loans Near $1 Trillion
AAVE plunged about 10% during the week ending 25 January, sliding from the $170–$175 zone into the mid-$150s. Technical indicators showed a measured pullback: RSI was neutral, MACD remained negative but its histogram was flattening, and volume profile suggested buyers were still active. Derivatives metrics remained steady—aggregated open interest hovered near $130 million and funding rates stayed positive, indicating long positions dominated and traders were not rushing to liquidate.
Separately, the Aave protocol is approaching a major milestone of $1 trillion in cumulative loans originated. That figure reflects high liquidity reuse driven by features such as flash loans, multi-chain expansion and efficient borrowing tools, rather than fresh capital inflows. For traders, the combination of a modest price drop, stable derivatives data, and strong protocol usage suggests contained selling pressure and continued interest in exposure to AAVE.
Neutral
The impact is assessed as neutral. Short-term price action shows a 10% pullback, but key trading indicators suggest limited panic: open interest remained around $130M and funding rates were positive, which implies traders retained long exposure rather than fleeing. Technicals indicate a measured correction (neutral RSI, flattening MACD histogram) and volume profile shows buyer participation. The approaching $1 trillion cumulative loans milestone is a fundamental positive that signals strong protocol utility and persistent demand for on-chain credit.
Historically, similar drops in major DeFi tokens accompanied by stable derivatives metrics have led to consolidation rather than extended sell-offs, as seen after earlier AAVE and COMP pullbacks where funding stability preceded re-accumulation. Short-term this could mean choppy trading and range-bound behavior with occasional rebounds if market-wide risk appetite returns. Long-term, robust loan activity and liquidity reuse support the token’s fundamental appeal, which could bolster sustained demand if macro conditions and DeFi growth remain favorable. Traders should watch funding rate shifts, open interest spikes, and on-chain loan growth for signals of renewed momentum or capitulation.