- On March 27, AAVE plunged by over 6%, declining its value from $105.19 to $98.06 with a market capitalization of $1.5 billion
- The drop comes amid the downward pressure on the overall crypto market, forcing Bitcoin to drop below $66,000
- AAVE is continuously facing security challenges and internal governance changes, which force investors to divert their investments
On Friday, the crypto market saw another decline for the week, with Bitcoin (BTC) falling below $66,000. Following this downfall in the crypto market, AAVE, the native cryptocurrency of the popular lending platform, also dropped by over 6%.
At the time of writing, the AAVE price is trading at around $98.14, down 6.58%, with a market capitalization of around $1.5 billion. The daily trading volume revolves around $286.78 million, according to CoinMarketCap.
AAVE Dips After Swap Incident and Internal Governance Changes
According to experts, the growing security concerns and headlines related to governance have created short-term weakness. They are calling this a healthy consolidation after earlier gains.
For the short term, the technical indicators are giving a bearish signal for the cryptocurrency. The daily moving averages are showing a strong sell signal. The 50-day moving average is sitting above current price levels, while the 200-day moving average is showing its longer-term decline that started in mid-March.
The 14-day Relative Strength Index (RSI) is revolving around 24, which is showing that the cryptocurrency is in oversold territory and it is facing strong selling pressure. This figure shows that AAVE is lacking strong buying momentum after the recent sell-off. This downward pressure is also confirmed by MACD, and its price movement is touching the lower Bollinger Band on the daily chart.
According to the technical analysis, the immediate support levels to watch are around $97.71 and the psychological $92 to $95 zone seen in recent swing lows. If it falls below this level, it might open a door for further downside toward $88 or even $79.
On the other hand, there are major resistance levels at $104 to $106, which are followed by stronger hurdles around $110 and $114, where sellers have repeatedly stepped in during the last 2 weeks.
There are various factors behind the drop in cryptocurrency. On March 10, an oracle pricing glitch on Aave V3 executed around $27 million in unexpected liquidations, mostly involving wstETH positions.
After some days, a trader lost nearly $50 million in a single swap through the CoW protocol when low liquidity caused extreme slippage on a large aEthUSDT-to-aEthAAVE trade. While these events were not directly caused by Aave, they clearly show risks in the protocol’s oracle and liquidity setup.
Apart from this, governance has added to the pressure. The Aave Chan Initiative revealed its decision to step away in early March, and BGD Labs announced it would exit in April. Many investors are seeing these developments as signs of internal issues.
The biggest news also arrived on Friday when the European Central Bank unveiled a working paper named “Who to regulate? Identifying actors within DeFi’s governance.” The paper shares a study on DeFi platforms like Aave, along with MakerDAO, Uniswap, and others.
This research paper revealed that governance tokens are heavily concentrated, with the top 100 holders controlling more than 80% of the supply in each protocol. For Aave, centralized and decentralized exchanges held around 22% of tokens. The ECB affirmed that this makes it hard to call these projects fully decentralized under the EU’s MiCA rules.
On the protocol, DeFi activity is also slowing down. Aave’s total value currently revolves around $23.68 billion, with $16.91 billion actively borrowed. While it is still holding the throne of leading lending platform, quarterly revenue for Q1 2026 came in at $191.84 million, which is down from $280.77 million in Q4 2025.
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