AAVE Tests Critical Support at $209 as Treasury Revamp Momentum Fades Following 21% Rally
Zach Anderson Oct 17, 2025 22:00
Aave price retreats to $209.45 (-8.6%) as traders take profits following the DAO's treasury-backed economic revamp announcement that drove a massive 21% surge earlier this week.
Quick Take
• AAVE trading at $209.45 (down 8.6% in 24h) • Profit-taking emerges after treasury revamp drove 21% weekly gains • Price testing lower Bollinger Band support near $214 • Bitcoin correlation weakening as AAVE shows relative strength
Market Events Driving Aave Price Movement
The primary catalyst affecting AAVE price this week remains the October 15th announcement of Aave DAO's treasury-backed economic revamp, which initially sparked a 21% surge as investors viewed the treasury utilization as a bullish development for protocol sustainability. However, today's 8.6% decline reflects natural profit-taking as traders lock in gains from the recent rally.
The secondary positive development - Aave's successful handling of $180 million in liquidations during Monday's market turbulence - continues to provide underlying support. The protocol's resilience during stress testing reinforced confidence in its automated systems, though this event had less immediate price impact compared to the treasury announcement.
No significant new catalysts have emerged in the past 48 hours, with today's AAVE price movement primarily driven by technical factors and profit-taking behavior following the week's strong performance.
AAVE Technical Analysis: Pullback Within Uptrend
Price Action Context
AAVE price currently trades below all major moving averages except the 200-day SMA at $256.65, indicating short-term bearish momentum despite the longer-term bullish structure. The current price of $209.45 represents a test of the lower Bollinger Band at $214.40, suggesting oversold conditions in the near term.
Trading volume of $79.7 million on Binance spot remains elevated compared to typical ranges, indicating continued institutional interest despite the pullback. The price action shows AAVE maintaining relative strength compared to Bitcoin's broader decline today.
Key Technical Indicators
The RSI reading of 32.30 places AAVE in neutral-to-oversold territory, suggesting potential for a bounce if support holds. The MACD histogram at -4.85 confirms bearish momentum, though the oversold RSI could signal an approaching reversal point.
The Bollinger Band position of -0.0491 indicates AAVE is trading just below the lower band, historically a level where buying interest emerges. Daily ATR of $27.91 reflects heightened volatility expectations.
Critical Price Levels for Aave Traders
Immediate Levels (24-48 hours)
• Resistance: $239.53 (7-day SMA and psychological level) • Support: $200.17 (24-hour low and round number support)
Breakout/Breakdown Scenarios
A break below $200 could trigger algorithmic selling toward the $185-190 zone, representing a 50% retracement of the recent rally. Conversely, reclaiming the $239 level would signal renewed buying interest and potential retest of $265 resistance.
AAVE Correlation Analysis
AAVE is showing divergent strength compared to Bitcoin today, maintaining better relative performance despite both assets declining. While Bitcoin correlation typically drives DeFi tokens, AAVE's protocol-specific news has created temporary decoupling.
Traditional market factors appear less influential currently, with AAVE's movement primarily driven by crypto-native catalysts and technical positioning rather than broader risk sentiment.
Trading Outlook: Aave Near-Term Prospects
Bullish Case
A hold above $205 combined with Bitcoin stabilization could spark a relief rally toward $240-250. The treasury revamp narrative remains intact, providing fundamental support for any technical bounce from oversold levels.
Bearish Case
Failure to hold $200 psychological support could trigger momentum selling toward $185, representing a deeper correction of the recent gains. Broader crypto market weakness remains a key risk factor.
Risk Management
Conservative traders should consider stops below $195 to limit downside exposure. Given the elevated ATR of $27.91, position sizing should account for continued volatility in the 10-15% daily range.
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