Have you ever watched a token get absolutely crushed for months, TVL bleeding out, whales dumping, and then—bam—one single candle smashes through resistance like it’s made of paper? That’s exactly what happened with AAVE this week, and honestly, it’s one of those moments that reminds me why I still love this space after all these years.
Let me paint the picture for you.
Three months of pure pain. AAVE lost almost half its value from the August peak, TVL collapsed from $76 billion to barely $54 billion, weekly revenue got sliced by more than 60 %. Most people had written the obituary. And then, almost overnight, the price rips 15 % in a single day and breaks out of a pattern that technical traders dream about.
The Bullish Reversal Nobody Saw Coming
I’m talking about a textbook descending parallel channel breakout on the daily timeframe. If you’re not familiar, this pattern forms when price makes lower highs and lower lows inside two parallel trendlines—classic bearish continuation structure. The moment price closes convincingly above the upper line, the odds flip dramatically in favor of the bulls.
And AAVE didn’t just poke its head above the line. It exploded through it with a 13.5 % green candle on heavy volume. That’s not a fake-out. That’s conviction.
What the Indicators Are Screaming Right Now
Let’s go beyond the price action for a second and look under the hood.
- MACD just printed a bullish crossover with expanding histogram bars—first meaningful one since early summer.
- Aroon Up spiked to 100 % while Aroon Down collapsed to 14 %. Translation: strongest uptrend reading in months.
- RSI’m seeing hidden bullish divergence on the daily RSI—price made lower low in November, RSI made higher low. Classic reversal signal.
- Volume shelf forming right under current price. If we hold here, the path of least resistance is clearly up.
I’ve traded enough cycles to know that when multiple indicators align like this after a prolonged downtrend, you pay attention.
Yes, TVL Is Ugly—Here’s Why It Might Not Matter
Now, I’m not going to sugar-coat it. The on-chain picture looks rough. Total value locked dropped to the lowest level since July. Weekly protocol revenue is down 60 % in two months ago. Fewer borrowers, fewer lenders, less activity overall.
But here’s the thing I’ve learned over the years: price and on-chain fundamentals can decouple for longer than most people expect—especially in DeFi.
Think about it. When TVL falls, it often means capital is rotating somewhere else chasing higher yields. That capital is still in the ecosystem. The moment sentiment flips (hello, Bitcoin breaking $93k again), money floods back into the leaders. And Aave is still the undisputed king of non-custodial lending.
Capital efficiency tends to follow price, not the other way around in bull markets.
— Something I keep reminding myself every cycle
Three Catalysts That Lit the Fuse
So what actually changed? Three things happened almost simultaneously.
First, the AAVE DAO is voting on a $50 million annual token buyback program. That’s not pocket change. It’s a direct value-accrual mechanism at a time when the protocol is cash-flow positive. Buybacks reduce circulating supply while signaling confidence from governance.
Second, Aave V4 is in final stages. From what’s been shared, we’re looking at unified liquidity layer across all deployments, better risk isolation, and gas optimizations that could seriously close the gap with newer competitors. Upgrades have historically been massive price catalysts (remember V3 launch in 2022?).
Third, expansion to Mantle network. Lower fees, new users, fresh liquidity pools. Every chain integration in the past has brought TVL inflows a few months later.
Add the broader market tailwind—Bitcoin reclaiming $93k, SEC commissioner talking about an “innovation exemption” framework—and suddenly the macro setup flipped from hostile to friendly in 48 hours.
Where Price Could Go From Here (Realistic Targets)
Let’s talk numbers.
The measured move from the channel breakout puts the first major target around $250—that’s the 50 % Fibonacci retracement of the entire August-to-November decline and lines up perfectly with the pattern projection.
Above that, $300 is the 61.8 % Fib and previous all-time high zone from 2021. If Bitcoin keeps running into year-end, I wouldn’t rule out a retest.
Downside? Current breakout level (~$180) should now act as support. A daily close back below would invalidate the setup and likely send us toward $150. But given momentum, that feels unlikely right now.
| Scenario | Price Target | Probability (my view) |
| Bull Case | $300+ | 35 % |
| Base Case | $240–$260 | 50 % |
| Bear Case | < $150 | 15 % |
Risks You Shouldn’t Ignore
Look, I’m excited, but I’m not blind.
- If Bitcoin rolls over from here, everything goes down—AAVE included.
- Whale distribution hasn’t stopped. On-chain data still shows large wallets trimming positions.
- Competitors like Morpho, Spark, Euler, are eating small pieces of market share.
- Regulatory clarity is coming, but the path might be bumpy.
That said, risk/reward at current levels feels heavily skewed to the upside. You’re buying a breakout with multiple catalysts and improving macro, while the worst of the bad news (TVL decline) seems priced in.
Final Thoughts
Sometimes the best trades are the ones that look terrible right until they don’t. AAVE spent months grinding everyone’s gears, and now the chart is doing exactly what we want to see at the start of a new leg up.
Whether you’re a DeFi native or just someone hunting asymmetric altcoin setups, this is one to keep on the radar. The combination of technical breakout, upcoming buybacks, V4 upgrade, and broader market strength has turned a beaten-down name into—potentially—one of the better risk/reward plays heading into 2026.
As always, do your own research, manage position size, and never bet the farm. But if the bulls are really back… AAVE might just lead the next DeFi charge.
See you at $250.
