AAVE Shows Strength Amid Global Economic Headwinds, Rebounds After 15% Drop
Despite ongoing global economic tensions, AAVE has proven resilient, bouncing back from a 15% decline over four days as the decentralized finance (DeFi) sector gains renewed momentum.
The protocol’s token price climbed from $240 to above $250, supported by growing interest in tokenized yield markets attracting both institutional and retail investors.
This price recovery comes amid heightened market volatility driven by renewed U.S.-China trade tensions, including reports of China breaching trade agreements, which have unsettled risk assets worldwide.
Nevertheless, the DeFi space continues to strengthen, with total value locked (TVL) rising to $178.52 billion. AAVE remains a dominant force, holding a TVL of $25.41 billion, underscoring its importance in the ecosystem.
Key Developments
AAVE’s recent rebound is largely fueled by its integration with Pendle’s tokenized yield markets, where newly launched markets rapidly hit supply caps, reflecting strong demand for innovative yield products in DeFi.
Earlier this week, the Ethereum Foundation (EF) borrowed $2 million in GHO — Aave’s decentralized stablecoin pegged to the U.S. dollar — by collateralizing ETH. This move illustrates EF’s strategy of leveraging crypto assets to finance operations while supporting Aave’s ecosystem.
The GHO stablecoin is fully overcollateralized, with EF’s loan secured by over 1.4 million Gwei of ETH. Interest payments on the loan contribute to Aave’s DAO treasury, reinforcing its community-governed financial model.
According to IntoTheBlock data, Aave commands a 45% market share in decentralized lending from January 2023 to May 2025, reflecting steady recovery since the 2023 DeFi downturn and cementing its position as the largest lending protocol by volume and activity.
Technical Analysis
AAVE formed a robust support zone near $242.70 during key trading windows, drawing strong buying interest with volumes surpassing 90,000 units.
A bullish ascending triangle pattern has emerged, highlighted by higher lows indicating steady accumulation despite resistance levels.
The token peaked at $255.96 before encountering resistance near $253.75, then settled between $248 and $250.
A volume surge early in the morning coincided with a quick price jump from $248.98 to $249.82, establishing a new resistance level.
Additionally, a cup-and-handle pattern developed, signaling consolidation and accumulation following the recent pullback.
Short-term price stabilization near $249, coupled with rising volume on upward moves, suggests building bullish momentum that could challenge the $250 resistance.
As DeFi yield markets expand, AAVE’s capacity to integrate new products and maintain strong support levels positions it well to capitalize on sector growth, even as macroeconomic uncertainties persist.
