Aave Token Surges 10% to $260 on Strong DeFi Demand

Aave, a decentralized finance (DeFi) protocol, has experienced a notable price rally this week, with its token AAVE trading above $260 on Friday. The rally, which has seen the price increase by over 10%, has been driven by several factors. On-chain data for AAVE presents a bullish outlook, with active loans and other metrics indicating strong demand for the protocol's services. This has led to speculation that the price could aim well beyond its all-time highs, with long-term targets of $750 to $1,000+ being speculated by bullish analysts.

Despite the bullish sentiment surrounding AAVE, it is important to note that the cryptocurrency market is highly volatile and unpredictable. While the on-chain data and analyst predictions may indicate a bullish outlook for AAVE, there is no guarantee that the price will continue to rise. Investors should exercise caution and conduct their own research before making any investment decisions.

After establishing a swing low at $114, Aave (AAVE) rallied significantly, peaking near the $316 high time frame resistance. Although the price has since pulled back, the overall trend remains bullish. The current correction is viewed as a potential setup for a higher low formation, which could support the continuation of the broader uptrend. Aave’s market structure remains intact, and despite the recent correction, price action is still constructive. Corrections in bullish trends are common and often represent “bullish selling”, a healthy phase that helps re-establish balance between buyers and sellers, allowing the market to reset before continuation.

Currently, Aave is trading near the point of control, which is acting as local resistance. A pullback from this area would not be unusual, especially following the overextension seen after the last rally. The $159 level, however, is the zone to watch. This area presents strong technical confluence: it aligns with the value area low, a high time frame support level, and a key swing low, forming a prime candidate for a higher low. If the price rotates back into this zone and attracts above-average volume, it would suggest that buyers are stepping in, not just to defend support, but to sustain the broader uptrend. Volume is critical here. Without strong participation, any bounce could lack the momentum needed to reclaim higher levels.

From a macro perspective, the correction from the $316 resistance has not invalidated the uptrend. As long as Aave prints a higher low and maintains its bullish structure, the setup remains constructive for further upside. However, failure to hold $159 could trigger a deeper retracement and shift the short-term outlook bearish. Some analysts have cautioned that the rally may be nearing its end. According to one analyst, the price is making a higher low after a full retrace from the previous rally, which could indicate that the upcoming rally will initiate a way higher price, as that's during a bull run. Another analyst has pointed out that the price has declined from a recent high of $271, but AAVE has still maintained its position as a DeFi heavyweight despite short-term drawdowns.

Watch the $159 support zone closely. If a higher low forms here with strong volume, Aave could resume its bullish trend and retest the $316 highs. A rejection at current resistance and a loss of $159 support would invalidate the bullish setup and tilt the structure bearish in the near term.