AAVE falls 6% to $135 as token slips below key support despite lending market growth

Technical Weakness Marks Difficult Stretch

At 11:46 UTC, AAVE registered a 24-hour decline of 5.29% to $140.12, before a further drop to about $135 in subsequent trading. This downturn extended a challenging week, with the token retreating from levels above $154 seen earlier in October.

AAVE’s slide pushed prices below several critical short-term technical indicators. The 20-day moving average, measured at approximately $159.53, underscored the distance between current pricing and its recent range. Notably, the initial slide below $140 also brought the token beneath a lower Bollinger Band level of $140.63 set on October 22.

No confirmed protocol exploit, emergency governance measure, or specific negative announcement has been linked to the day’s slump. Instead, the selloff appears consistent with overall weakness across digital assets and ongoing pressure on highly leveraged positions. However, determining the exact impact of these variables remains difficult.

AAVE has traded below major technical reference points, signaling a loss of momentum and reflecting challenging conditions seen across the broader DeFi sector.

History shows Aave’s on-chain protocol activity and the price of its governance token do not always move in tandem, particularly during periods of market volatility or governance disputes.

Expansion of Lending Markets Continues

Despite the decline in token price, Aave’s developers have advanced several initiatives aimed at growing its lending infrastructure. On October 22, Aave V4 launched three new independently managed markets for Ripple’s RLUSD, PayPal’s PYUSD and Origin’s OUSD stablecoins.

This institutional lending expansion also saw Sentora take on a role as an external market curator within Aave’s ecosystem.

Separately, Babylon Labs has put forward a proposal that would allow users to borrow stablecoins against Bitcoin held on its native blockchain. The proposal is currently subject to community governance processes and technical evaluation.

These initiatives aim to broaden Aave’s appeal to users and institutional participants, though they do not automatically translate into renewed buying for the governance token.

Aave’s token buyback program, funded by protocol revenue and launched in 2025, was paused following a significant incident related to rsETH this April. That disruption previously triggered sharp selling, highlighting the sensitivity of AAVE’s price to lending risks and operational events.

Mini dictionary: Aave is a decentralized finance (DeFi) protocol that allows users to lend and borrow cryptocurrencies using a non-custodial, open-source system governed by holders of its AAVE token.

Key Support and Resistance—What Next for AAVE?

Looking ahead, AAVE faces a technical challenge in reclaiming the $140 level. The $149 to $150 range, where several moving averages cluster, represents the next area of potential resistance. A sustained push beyond $150 could bring $155 to $160 into play as upper reference points, although these figures remain conditional technical targets and not firm predictions.

Should further selling occur, $130 emerges as an important psychological reference. A steeper decline could test the $120 support in the coming sessions.

Institutional research provides a wider range of potential long-term scenarios for AAVE. Grayscale has projected a target valuation of $175 by 2027, while Standard Chartered has outlined even more optimistic figures based on the ongoing maturation of decentralized finance.

Grayscale’s analysis places AAVE’s 2027 target at $175, reflecting a bullish long-term view tied to the protocol’s capacity for continued innovation despite market headwinds.