AAVE Set to Breakout: Rare Technical Pattern Warns of Next 50% Rally
The price of AAVE – the native token of leading DeFi platform Aave – is attracting strong attention from investors as it has increased by more than 132% since the April bottom, and current technical indicators suggest that another potential rally of up to 50% is on the horizon.
Strong Ecosystem and Liquidity Growth
Aave, one of the largest lending protocols in the DeFi market, is witnessing an explosion in the size of its ecosystem. According to official data from Aave, the total market cap on the Ethereum network has hit $33.5 billion, of which $13 billion is active loans, and $20.45 billion is assets available for lending.
Aave has also expanded to other blockchains such as Base, Sonic, and Arbitrum. On the newly launched Sonic network, Aave has quickly reached a market cap of $383 million, while on Base, it has reached $882 million in the past week alone.
Stablecoin GHO Accelerates
Aave’s stablecoin GHO is also showing signs of strong growth, with a market cap of $255 million, an all-time high. This shows that users’ confidence in GHO is increasing, contributing to the overall position of the Aave ecosystem.
Derivatives Data Strengthens the Bullish Momentum
According to data from CoinGlass, the open interest in the AAVE futures market has surpassed $550 million, the highest level so far in 2025. This is a signal that large money is pouring into AAVE and investors are betting on a bullish trend.
In addition, AAVE's funding rate has remained positive since May 6, indicating that the majority of investors are taking long positions and believe that the price will continue to rise.
Notably, the number of AAVE held on exchanges has decreased sharply. As of now, only 2.16 million AAVE are on exchanges, down significantly from the peak of 2.72 million at the beginning of the year. This is a sign that investors are withdrawing AAVE to personal wallets for long-term holding.
Technical analysis: Golden diagonal and falling wedge suggest a strong rally
AAVE's daily price chart shows the formation of a falling wedge pattern - a classic bullish reversal pattern in technical analysis. The breakout from this pattern has confirmed the bullish momentum.
Currently, AAVE has surpassed the 50% Fibonacci Retracement level, indicating that the market is recovering more than half of what it lost since the 2021 peak. At the same time, the ADX (Average Directional Index) has crossed above 40, confirming the strength of the current uptrend (ADX > 25 is considered a strong trend sign).
Most notably, the "golden cross" has appeared - when the 50-day moving average crosses above the 200-day, which usually signals a new bull cycle.
Next Target: $400
With strong technical momentum, positive on-chain metrics, and capital inflows into the derivatives market, AAVE's next target is set at $400, the most recent high recorded in November last year.
If the rally continues, AAVE could very well be one of the best performing altcoins in the market in Q2/2025.
Conclusion:
The combination of strong technical signals, expanding multi-chain ecosystem, capital inflows into futures contracts, and declining exchange supply are laying the groundwork for an impressive breakout for AAVE. With the entire DeFi industry recovering strongly, AAVE is emerging as the next bright star.
