AAVE holds above $90 as protocol deposits rise, but retail demand weakens

Key takeaways

• AAVE is holding above its 50-day EMA at $90.80 as its near-term recovery continues.
• Deposits in Aave V3 on Monad increased by more than $500 million over the past month.
• Aave V4 deposits reached a record high above $350 million.

Aave (AAVE) is extending its mild recovery on Tuesday, trading above the 50-day Exponential Moving Average at $90.80.

The recovery comes amid increased adoption of Aave’s lending protocols. Aave V3’s deployment on the Monad Layer 1 blockchain attracted more than $500 million in deposits over the past month, alongside more than $215 million in active loans.

Despite the rise in protocol activity, weak derivatives data and bearish momentum indicators continue to cloud AAVE’s price outlook.

Aave V4 deposits reach record high

Deposits in Aave V4 have surpassed $350 million, establishing a new record after increasing by more than $100 million over the past 30 days.

The growth suggests rising adoption and may be partly driven by an attractive USDC borrowing offer. Holders of cbBTC, WBTC, WETH and wstETH can reportedly access a borrowing rate of negative 0.2%.

The increase in deposits across Aave V3 on Monad and Aave V4 highlights growing use of the protocol, even as demand for the AAVE token remains subdued among retail traders.

AAVE is losing momentum in the derivatives market despite the growth in protocol deposits.

Futures open interest declined by more than 6% over the previous 24 hours to $302.15 million, according to CoinGlass. The drop reflects a contraction in the value of outstanding futures contracts and suggests traders are reducing their exposure.

AAVE’s funding rate also fell below zero to negative 0.0046%. Negative funding indicates a bearish tilt, with short-position holders paying traders holding long positions.

Meanwhile, the 24-hour long-to-short ratio declined to 0.9372, showing that active short positions outnumber longs and reinforcing the cautious market outlook.

AAVE technical outlook: Could the price fall to $70?

AAVE is hovering above $90 at the time of writing on Tuesday, maintaining a mildly constructive near-term position above its 50-day EMA at $90.80.

However, the token remains well below its 200-day EMA at $112.75, suggesting that its broader recovery potential remains limited.

The Moving Average Convergence Divergence indicator continues to decline below its signal line, reflecting persistent bearish momentum.

The Relative Strength Index stands near 49 and is trending lower while AAVE’s price forms a modest upward trend. This bearish divergence suggests that buying momentum is weakening despite the recent price recovery.

The 50-day EMA at $90.80 is the key immediate support level. A decisive daily close below this moving average could accelerate selling pressure and trigger a roughly 20% decline toward the June 18 low of $70.65.

The psychological $100 level represents AAVE’s first major resistance. This area sits close to the May 10 high of $103.51, creating a broader resistance zone between $100 and $103.51.

A sustained break above this region would strengthen the bullish case and could allow AAVE to target the 200-day EMA at $112.75.