Will Aave price soar to $500 as exchange balances fall?

Aave remained in a tight range on Saturday but strong technicals and rising deposits mean it could recover soon.

Aave (AAVE), originally known as ETHLend until September 2020, was trading at $353 at last check on Saturday. It remains 370% above the 2024 low.

Source: CoinGecko

Data shows that the total value locked on its network has risen to a record high of 6.12 million ETH, or $5.12 billion. Another figure from TokenTerminal shows that the ecosystem’s net deposits reached a record level of $36 billion. This is higher than the $10 billion in deposits it had in the same period last year.

At the end of the year, Aave reached an all-time high in deposits for the first time since 2021.

With $35 billion in net deposits, Aave is currently the largest DeFi protocol. https://t.co/TjXLfggJuN

— Aave (@aave) January 1, 2025

This growth has made Aave a highly profitable player in the crypto industry. Ultimately, total fees rose to over $474 million in the last 12 months.

Most importantly, the performance has been remarkable since increasing competition from lending protocols such as Morpho, Spark, Compound, Venus and Save.

Aave is currently working on the V4 project, which will be the largest upgrade in history. According to the proposal, V4 will incorporate a new architecture that increases modularity and reduces governance burden. It will also integrate with Aave stablecoin GHO, which has over $146 million in assets. The upgrade will be launched in the second half of the year.

Meanwhile, Nansen data shows that Aave tokens are leaving centralized exchanges, which is a bullish sign for the coin. Its total tokens on exchanges decreased by 2.43% to 5.3 million in the last seven days. Only 33% of all Aave tokens are on the exchange, meaning many token holders have a long-term horizon.

AAVE tokens on exchanges | Source: Nansen Aave May Rise to $500

Aave has bullish techniques. The chart above shows that the token dropped to $71.41 in 2024 and is currently above $300.

AAVE chart | Source: crypto.news

Aave remains above the 50-day moving average, providing significant support.

Most importantly, the coin is forming a bullish pennant chart pattern consisting of a long vertical line and a symmetrical triangle. This triangle is now approaching its confluence. This often leads to a strong breakout.

Therefore, if this happens, the Aave token’s first target will be last year’s high of $400. A break above this level will signal more gains, potentially to the psychological $500 point.

The bullish view will be invalidated if the coin falls below the 50-day moving average.

Created by Finnish entrepreneur Stani Kulechov in 2017, Aave is used for governance, staking, and other protocol-related functions.