Aave News Today: Aave's DeFi Dominance Can't Stem Price Slide as Capital Favors AI Narrative

Aave's governance token, AAVE, plunged below critical support levels on October 9, 2025, amid broader crypto market weakness, with the token falling 5% in a single trading session. The decline pushed AAVE to a low of $270, a nearly 10% drop from its weekly high of $284. Technical analysis from CoinDesk Research indicated bearish momentum, with failed recovery attempts confirming sustained selling pressure. The token briefly stabilized at $272 later in the day but remained under pressure as Bitcoin approached $120,000 and the CoinDesk 20 Index fell over 4%.

The breakdown below $273 triggered algorithmic liquidations, exacerbating the sell-off. Trading volume spiked to 63,651 units, exceeding the 24-hour average of 31,013 units. Key technical resistance was identified at $280.00, while support levels at $273.00 were repeatedly tested without success. The failure to hold above $280 marked a critical juncture, with analysts warning of potential further declines to $240–$256.

Market fundamentals highlighted Aave's dominant position in decentralized finance (DeFi), with the protocol maintaining over 50% of DeFi lending revenue as of June 2025. Total value locked (TVL) remained robust at $44.44 billion, reflecting strong protocol activity despite the token's price slide. However, on-chain flows turned negative, with net inflows of -$1.47 million recorded on October 9, signaling renewed exchange-based selling. Futures open interest stood at $486.28 million, amplifying volatility risks as leveraged positions could accelerate price movements.

Technical indicators underscored bearish sentiment. AAVE traded below all major hourly exponential moving averages (EMAs), forming a dense resistance cluster above $283.75. The relative strength index (RSI) approached oversold territory at 37.83, but without reversal divergence, suggesting continued downward pressure. On the daily chart, the token's failed breakout above $280 and subsequent retest of the $240–$280 range highlighted structural weaknesses. The 50-day moving average converged near $240, offering a potential confluence point for buyers.

Sector dynamics further pressured Aave, with capital shifting toward AI tokens and the Base chain narrative, reducing liquidity for DeFi majors. Institutional rebalancing following Grayscale's adjustments and Bitcoin's rising dominance compounded the sell-off. Analysts noted that AAVE's price stalling despite strong protocol fundamentals-such as a $4.20 billion market cap and $340.02 million 24-hour trading volume-reflected a disconnect between capital inflows and retail demand.

The immediate outlook remains bearish, with Aave's price testing the $273–$275 support zone. A clean breakdown could expose key Fibonacci levels at $256, while a recovery above $281–$284 would be needed to reverse the short-term trend. For now, the path of least resistance favors further declines, with algorithmic liquidations and leveraged positions poised to amplify volatility. Investors are advised to monitor on-chain flows and volume dynamics as potential catalysts for stabilization or deeper retracements.

Source: [1] Aave Plunges Below Key Support Levels Amid Broader Crypto Weakness (https://www.coindesk.com/markets/2025/10/09/aave-plunges-below-key-support-levels-amid-broader-crypto-weakness)

[2] Aave Struggles to Hold $280 After Failed Breakout (https://thecurrencyanalytics.com/altcoins/aave-struggles-to-hold-280-after-failed-breakout-180610)

[3] Aave Faces Renewed Selling Pressure (https://tradersunion.com/news/cryptocurrency-news/show/630910-aave-faces-renewed-selling-pressure/)

[4] Aave Dominates DeFi Lending, But Its Price Stalls (https://thecurrencyanalytics.com/altcoins/aave-dominates-defi-lending-but-its-price-stalls-heres-why-183801)