Aave [AAVE] might be closing in on a solid profit-taking setup.
From a technical standpoint, the altcoin is up over 20% this week, and is among the top performers in the weekly ranking. The price of AAVE crypto climbed back to where it was at the beginning of January as it rose above $180 to bring both long- and short-term players closer to breakeven. With technicals now overbought, the push towards $200 could see more profit-taking pressure if momentum begins to slow down.
Moreover, with AAVE/BTC up 10%+ this month, it has gained ground for the fourth consecutive week, which suggests that AAVE’s 60%+ rally is not just on the back of the broader market, but also due to strength relative to Bitcoin [BTC]. So, with AAVE/BTC extended, any loss of momentum could increase the risk of a pullback.
In essence, AAVE’s move toward $200 doesn’t look like a straight-line rally.
The main question is what is fueling AAVE crypto’s upside. As mentioned above, more than 60% of its monthly gains are coming from rotational flows, meaning that capital moving from BTC to AAVE appears to be a critical factor.
So, if BTC.D breaks out and capital starts flowing back to BTC, could that put pressure on AAVE crypto? From a technical perspective, a change in flows could reduce AAVE/BTC momentum and make the path to $200 more challenging, especially with the altcoin already looking stretched.
AAVE crypto’s on-chain momentum puts fuel to the rally
AAVE’s on-chain setup could be giving a different perspective.
In a post on X, the company announced that Aave saw $1.1 trillion in borrow volume. Thus, the demand for lending services on the platform appears to be robust, while its technicals appear to be stretched.
What can support this view is the chart below. According to DeFiLlama data, AAVE crypto closed last month with on-chain figures returning to where they were seen in early June. TVL peaked at almost $20 million, up 18% from the previous month, while fees crossed $37 million, climbing 15% from the same period last year.
Taken together, these figures confirm that Aave’s on-chain activity is growing. The increased TVL speaks of inflows of capital into the platform, and the increasing fees demonstrate the strong lending demand. In other words, the rise in AAVE’s price is justified by its actual usage on-chain.
That makes AAVE’s current upside more than just rotational flows from Bitcoin.
With strong network demand, steady capital flows, and positive technical momentum, AAVE could continue to outperform Bitcoin in the near term, keeping the $200 target in focus.
Final Summary
- AAVE’s strong rally could push it toward $200, but overbought conditions may trigger profit-taking.
- Rising TVL, fees, and lending demand show that AAVE’s on-chain activity is also growing.
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