Aave Protocol Deposits Surge While Token Faces Mounting Bearish Pressure

Explosive Growth Across Protocol Deployments

Aave’s lending protocols are attracting substantial capital inflows, demonstrating robust confidence in the platform’s core functionality despite headwinds affecting the AAVE token. Over the past month, Aave V3 deployed on the Monad Layer 1 blockchain has accumulated more than $500 million in deposits, with active loans exceeding $215 million. This expansion represents a meaningful diversification of Aave’s capital base and signals growing demand for the protocol’s lending services beyond Ethereum mainnet.

Aave V4 is experiencing equally impressive momentum, with deposits surpassing $350 million and establishing a new record. The protocol added more than $100 million in deposits over the past 30 days, a trajectory reflecting accelerating adoption. This growth may be partly driven by compelling borrowing incentives; holders of strategic assets including cbBTC, WBTC, WETH, and wstETH can access borrowing rates as low as negative 0.2%, effectively generating returns while taking loans.

Token Struggles Despite Protocol Success

The contrast between protocol vitality and token sentiment has grown more pronounced. AAVE has been extending a mild recovery, trading above its 50-day exponential moving average at $90.80. However, the derivatives market tells a different story. According to CoinGlass, futures open interest declined more than 6% over the preceding 24 hours to $302.15 million, reflecting a contraction in outstanding positions and reduced trader exposure. This shift signals weakening speculative momentum underpinning the token.

Additional bearish indicators reinforce caution. The funding rate has turned negative at negative 0.0046%, meaning short-position holders are paying traders holding long positions—a signal of prevailing bearish sentiment. The 24-hour long-to-short ratio stands at 0.9372, indicating more traders maintain short positions relative to longs. These metrics underscore muted retail demand for the AAVE token, even as institutional capital flows into the underlying protocol.

Technical Headwinds Cloud Upside Potential

AAVE’s technical picture remains constrained by broader bearish momentum. The token sits well below its 200-day exponential moving average at $112.75, limiting near-term recovery potential. The Moving Average Convergence Divergence indicator continues declining below its signal line, reinforcing persistent bearish pressure. The Relative Strength Index hovers near 49 and is trending lower—a bearish divergence suggesting that buying momentum is weakening despite the recent price recovery.

Critical support rests at the 50-day EMA of $90.80; a decisive daily close below this level could accelerate selling pressure and drive the token toward the June 18 low of approximately $70.65—representing roughly 20% downside. Resistance forms at the psychological $100 level and the May 10 high of $103.51. A sustained break above $103.51 would strengthen the bullish narrative and potentially allow AAVE to target its 200-day EMA at $112.75.

This pattern highlights a broader market reality: DeFi infrastructure adoption can thrive even as token speculation cools.

Source: CoinGlass, via the source. Not financial advice.