Will Aave price soar to $500 as exchange balances fall?

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As a seasoned researcher with over two decades of experience in the financial markets, I have seen my fair share of bull and bear runs. However, the growth trajectory of Aave (AAVE) is truly remarkable. With its total value locked at an all-time high and net deposits soaring, it’s safe to say that Aave is not just a player but a powerhouse in the crypto industry.

The bullish technicals are hard to ignore. The coin has formed a bullish pennant chart pattern, which, if breaks out, could potentially propel AAVE to its initial target of $400 and beyond to the psychological point at $500. But as they say in trading, “the markets can remain irrational longer than you can stay solvent,” so it’s always important to keep a close eye on the 50-day moving average for support.

It’s also worth noting that Aave is not just a tool for governance and staking but a testament to the power of decentralized finance (DeFi). With competition rising from lending protocols, it’s impressive to see how Aave has maintained its position as the largest DeFi protocol.

Lastly, I can’t help but chuckle at the irony. Just a few years ago, AAVE was known as ETHLend. Now, it’s poised to soar past $500. Who would have lent that prediction back then? It just goes to show you, sometimes the best investment is in the future.

On Saturday, Aave held steady within a narrow band, yet its robust technical indicators combined with a surge in deposits suggest a potential recovery is imminent.

As an analyst, I’m sharing an update on Aave (AAVE), which used to be known as ETHLend until September 2020. At the time of my latest check, it was trading at approximately $353. Notably, this digital asset is currently sitting 370% above its projected lows for the year 2024.

The data indicates that the total worth locked within its network reached an all-time peak of 6.12 million ETH, equivalent to approximately $5.12 billion. Additionally, TokenTerminal’s figures demonstrate that the system’s net deposits currently stand at a record level of $36 billion, surpassing the $10 billion in deposits from the same timeframe last year.

As the year comes to an end, Aave has set a new record for total deposits, marking the first time this has happened since 2021. With approximately $35 billion in net deposits, Aave now ranks as the largest decentralized finance (DeFi) protocol.

— Aave (@aave) January 1, 2025

Aave’s expansion in the crypto market has resulted in it becoming a particularly lucrative competitor, considering that its total fees surpassed $474 million within the past year.

Notably, the standout feature of our performance has been evident as we face increasing competition from peer lending platforms such as Morpho, Spark, Compound, Venus, and Save.

Aave is currently developing its major project V4, which promises to set a new standard for upgrades. As outlined in the proposal, V4 aims to merge a novel architecture that improves modularity and decreases governance responsibilities. Additionally, it will link with GHO, the stablecoin of Aave, boasting over $146 million worth of assets. The rollout is scheduled for the latter part of the year.

Over the past week, data from Nansen indicates that Aave tokens are moving off centralized exchanges, which could be a positive signal for the coin. The total number of Aave tokens on these exchanges decreased by 2.43% to approximately 5.3 million. This implies that around 67% of all Aave tokens are not on exchanges, suggesting that many holders have a long-term investment strategy.

Aave could soar to $500

In simpler terms, the graph indicates that AAVE’s price trend is positive. Back in 2024, the token reached a low of around $71.41, but as we can see now, it has climbed significantly and surpassed $300.

Aave has remained above the 50-day moving average, which is providing important support.

Primarily, the coin’s price action is shaping into a bullish pennant, which consists of a lengthy ascending line followed by an equilateral triangle. This triangle is approaching its merging point, a juncture that historically triggers a powerful breakout, typically indicative of a strong upward trend.

Given this situation, if it unfolds as expected, the Aave token’s primary goal would be to reach the peak of last year, which was around $400. Exceeding this mark would suggest further increases, possibly reaching the psychologically significant level of $500.

The bullish view will become invalid if the coin falls below the 50-day moving average.

2017 saw the birth of Aave, a platform conceived by innovative Finnish entrepreneur Stani Kulechov. It serves various purposes such as managing decisions, placing assets, and handling other technical aspects within the system.

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2025-01-04 18:32