AAVE Maintains Stability Above $90 Amid Increased Deposits but Faces Retail Demand Challenges

AAVE is currently trading above $90, specifically at $90.80, as it continues its mild recovery trend. This positive movement coincides with a notable increase in deposits within Aave’s lending protocols, particularly Aave V3 on the Monad Layer 1 blockchain, which saw over $500 million in deposits in the past month.

Additionally, Aave V4 has set a new record with deposits exceeding $350 million, reflecting a growing interest in the platform. This surge in activity may be partially attributed to attractive borrowing rates for holders of specific assets, including cbBTC and WBTC, who can access negative borrowing rates.

Despite these positive developments in protocol usage, the overall outlook for AAVE remains cautious. Data from CoinGlass indicates a decline in futures open interest by over 6% to $302.15 million, suggesting that traders are reducing their exposure. Furthermore, AAVE’s funding rate has dipped below zero, indicating a bearish sentiment in the market.

From a technical perspective, AAVE is positioned above its 50-day Exponential Moving Average (EMA) at $90.80, but it remains significantly below its 200-day EMA at $112.75. The Moving Average Convergence Divergence (MACD) indicator shows a persistent bearish trend, and the Relative Strength Index (RSI) is trending lower, hinting at weakening buying momentum.

The immediate support level for AAVE is at $90.80. A close below this level could trigger increased selling pressure, potentially driving the price down to around $70. Conversely, the $100 mark serves as a significant resistance level, and a sustained break above this could bolster bullish sentiment.