AAVE Price Falls Amid $5 Billion Outflows and DeFi Hacks

Key Insights

• AAVE price continued its strong downward trend today, April 19.
• The network suffered a strong plunge in total value locked (TVL).
• AAVE has formed a double-top pattern, pointing to more downside.

AAVE price continues in a freefall as the biggest player in decentralized finance (DeFi) gained momentum. It dropped to a low of $86 on Sunday, its lowest level since August last year.

It has dropped by over 77% from its all-time high as the total value locked (TVL) in the industry dropped.

AAVE price continued falling on Sunday as KelpDAO. It’s a top player in decentralized finance (DeFi) that suffered a $292 hack, one of the biggest in the past few years.

This exploit happened as its rsETH bridge suffered a hack through the LayerZero bridge. LayerZero is one of the top players in the bridging industry. Around 116,500 rsETH was drained within minutes. As a result, AAVE decided to freeze the rsETH markets on Aave V3 and V4.

The new hack joins other large ones that have happened in the past few years. According to DeFiLlama, hacks in decentralized finance have now exceeded $7.7 billion in total. Of that amount, $2.9 billion came specifically from bridge exploits.

Data shows that hacks cost investors over $1.71 billion in the past twelve months. April was the worst month for losses. Hacks worth over $606 million have happened this month, much higher than last month’s $41 million.

Other notable hacks this month included Grinex, Rhea Lend, Hyperbridge, Drift Trade, Cyrus Finance, Blend Pools, Matcha, and Resolv. Alongside Kelp, these incidents highlight the growing vulnerability across DeFi platforms.

As a result, the total value locked (TVL) in Aave has been in a freefall, a trend that accelerated on Sunday. It has dropped from over $43 billion in September last year to $19.7 billion today. This amount is the lowest level since May last year.

Aave suffered the most outflows on Sunday as the TVL dropped from over $25 billion on Saturday to $19.7 billion. These outflows happened as investors dumped their tokens as fear spread in the market.

More data shows that the fees collected by Aave have been in a strong downward trend in the past few months. According to DeFi Llama, the fees have fallen from a high of $114 million in October last year to $47 million last month. Its fees this month are $31 million, its lowest level in months.

Similarly, Aave’s revenue has also been falling in this period. It has moved from a high of $15.4 million in September to $4.3 million this month.

In addition to the ongoing crypto winter and hacks, its performance has been because of the leadership wrangles in the DAO. In a recent statement, Stani Kulechuv, the founder, highlighted the fact that three wallets control 58% of its voting power.

Additionally, Aave Labs integrated CoW Swap, in a transaction that redirected $10 million in fees to developers. That led to a strong downtrend of the token. Some notable contributors like Chaos Labs, BGD Labs, and ACI exited the governance.

The weekly chart shows that the AAVE token has crashed in the past few months. Also, the chart points to more downside. It formed a double-top pattern at $385 and a neckline at $115, its lowest level in April this year. A double-top often leads to a strong bearish breakdown.

AAVE has now plunged below the neckline at $114, confirming the bearish breakdown. It has also dropped below the 50-week moving average. On the other hand, the Average Directional Index (ADX) has jumped to 40. A rising ADX is a sign that its momentum is continuing.

The RSI has been in a strong downward trend in the past few months and is now hovering at its oversold level.

The token will likely keep falling as sellers push toward the $52 target. That level marks its lowest point in June and December of 2022 and 2023. This target is about 45% below the current level.

The post AAVE Price Prediction as it Suffers $5 Billion in Outflows appeared first on The Market Periodical.