AAVE Falls 14.6% Despite Aave TVL Hitting $35 Billion All-Time High

AAVE, the governance token for the Aave decentralized finance (DeFi) protocol, has seen a sharp 14.6% decline over the past seven days despite the platform's total value locked (TVL) reaching a new all-time high of $35 billion, representing 24% of the broader DeFi market [1]. The token currently trades at around $255.84, down 7.33% from the previous month and significantly below its 2021 all-time high of $661–$670. The divergence between Aave’s growing protocol metrics and its token price has raised questions about the sustainability of its valuation [1].

In the last 24 hours, AAVE saw a notable increase in trading volume, with $561.47 million transacted, up 34.78% from the prior period. This increase in activity suggests continued interest in the token, even amid price weakness. However, the market cap to TVL ratio remains at 0.115, underscoring a clear disconnect between the platform’s operational performance and its token’s market capitalization of $3.88 billion. Aave’s fully diluted valuation is estimated at $4.09 billion, with its token supply capped at 16 million, of which approximately 15.2 million are in circulation [1].

The recent price movement has seen AAVE trade near a critical support level of $253.68, with near-term resistance at $264.41. The price has retreated from a peak of around $330 in mid-July and is now in a consolidation phase. Analysts and community members are watching closely whether Aave can stabilize in this range or face further downward pressure. Some observers note that unlike previous price surges, which were driven largely by speculative hype, current momentum appears to be fueled by improving fundamentals [1].

Despite the token's underperformance, Aave continues to attract user activity and integration across the DeFi ecosystem. On-chain data suggests that the platform remains a key player in the rapidly expanding DeFi sector, which now holds a TVL of $145 billion, a three-year high. Aave's dominance in this space is expected to remain a critical factor in its long-term valuation, though the current market conditions may take time to reflect this growth [1].

Source: [1] AAVE Drops 14.6% Even as DeFi TVL Climbs to $35B — Can Price Catch Up with Protocol Growth? (https://cryptonewsland.com/aave-drops-14-6-even-as-defi-tvl-climbs-to-35b-can-price-catch-up-with-protocol-growth/)