Aave (AAVE) Faces Sharp Decline Amid Market Weakness Despite Institutional Growth

Aave’s governance token, AAVE, saw a steep drop this week, falling over 16% from Monday’s high of $248 to around $208 by Thursday. The decentralized lending protocol’s token lost 8% in a single day, signaling strong bearish momentum even as other major DeFi tokens showed resilience.

According to CoinDesk Research’s market insight tool, AAVE formed a pattern of lower highs and lower lows, a technical indicator of sustained downside pressure. Trading volumes surged more than 40% above the seven-day average, pointing to active selling and repricing rather than a gradual decline.

The token also underperformed the CoinDesk 5 Index (CD5), which slipped roughly 4%, highlighting AAVE’s broader market weakness. The downturn came despite impressive performance from Aave’s institutional real-world asset lending platform, Horizon, which has surpassed $450 million in growth since launching just two months ago.

From a technical standpoint, AAVE’s $211 support level failed, paving the way for potential further losses. Previous attempts to rebound were capped at $235, reinforcing this area as a strong resistance zone. Analysts also observed three major volume spikes at $228, $219, and $213, confirming intensified selling activity. The token’s $26.88 trading range, reflecting an 11.4% overall decline, reinforces its current bearish outlook.

Traders are now watching for signs of stabilization or a deeper pullback, as a failed recovery near $212.70 could extend losses further. With market sentiment weakening and technical indicators favoring sellers, AAVE’s near-term outlook remains cautious despite its ongoing institutional adoption through Horizon.