DeFi’s Explosive Comeback Ignites AAVE’s Surge: Is $400 the Next Target?

DeFi's roaring back—and AAVE's leading the charge with a jaw-dropping rally that's got everyone talking.

What's Driving the Momentum?

Revived protocol activity, surging lending volumes, and renewed institutional interest are fueling this parabolic move. The DeFi sector's pumping fresh blood into the ecosystem, and AAVE's soaking up the benefits.

The $400 Question

Market sentiment's shifting from cautious optimism to outright bullishness as technical indicators scream momentum. Traders are betting big on breaking through previous resistance levels—though let's be real, in crypto, even the 'smart money' sometimes just follows the hype.

Whether this surge has legs or just another case of 'number go up' theater remains to be seen—but right now, DeFi's not just back, it's playing for keeps.

Key Takeaways

The combination of a strong ethereum and demand for decentralized finance products in the market could be a positive feedback loop for Aave. 

Aave [AAVE] reclaimed the $300 mark during this week’s trading and was likely to reach the next milestone at $400 soon. This level was also where the DeFi token saw a correction in December 2024.

On Friday, the 22nd of August, Federal Reserve Chair Jerome Powell indicated there was a possibility of rate cuts soon. This news could be good for the DeFi sector, and thereby AAVE.

The stock and crypto markets reacted bullishly. Ethereum [ETH] was just 3.1% away from its all-time high.

As the backbone of DeFi infrastructure, stronger ETH prices and cheaper borrowing costs could funnel more capital into Aave’s lending and staking markets. A DeFi revival looked possible in the months ahead.

New highs ahead, but also a warning for AAVE holders

Source: AAVE/USDT on TradingView

The weekly chart of AAVE showed a bullish resurgence in progress. Early 2025 saw a deep retracement that reached below the 78.6% level, but the recovery since then has been encouraging.

The OBV made a new high in recent months compared to late 2024. This signaled increased buying pressure in 2025.

Meanwhile, the MACD was slowly climbing higher, but was not overextended and didn’t exhibit a bearish divergence yet.

The $417 and $527 resistance levels from 2021 were the next key targets to watch out for. The Fibonacci extension levels also plotted potential take-profit zones.

Profit-taking warning lights

Source: Glassnode

The risk of selling pressure was evident, as 97.4% of Aave supply sat in profit at press time. This was a higher figure than at any point over the past 12 months, including December 2024.

Source: Glassnode

If a correction unfolds, it could be halted at the psychological round number support at $300.

The Cost Basis Distribution Heatmap gives a visualization of the supply density across price levels. Over the past two years, the $300 and $280 prices were at which sizable amounts of AAVE were acquired.

Hence, they are support levels.

To the north, there was scant supply, with $390 being a possible threat to the bulls. Overall, further gains were likely, but traders and investors should beware of selling pressure from profit-taking activity.