AAVE's TVL reaches an all-time high – Will the price break out accordingly?

Aave (AAVE) recorded an increase of nearly 1% at the time of writing on Wednesday, continuing an impressive bounce back of 3.45% from the previous session, amid a total value locked (TVL) on the platform reaching a record high of 26.49 billion USD. However, sentiment in the derivatives market remains mixed, as AAVE gradually approaches the important psychological resistance level at $300. Technically, the current signals lean towards a bullish trend, with market momentum continuing to strengthen.

AAVE's TVL reaches a new historical peak

According to data from DeFiLlama, the Aave protocol has just recorded a historic milestone as the total value locked (TVL) reached a record high of 26.49 billion USD. TVL – an indicator reflecting the total value of assets deposited into a DeFi protocol – the higher it is, the more it indicates the level of trust and active activity on that platform.

TVL of AAVE | Source: DeFiLlamaA remarkable breakout of Aave occurs amidst a rejuvenation across the entire decentralized finance space (DeFi). As of now, the total TVL across the industry has reached 116.786 billion USD – a clear sign that the capital is returning strongly to DeFi.

Mixed sentiment in the AAVE derivative market

According to data from CoinGlass, the open contract (OI) – which represents the total value of open AAVE derivative contracts – has surged by 14.28% in the past 24 hours, reaching 678.07 million USD. This trend indicates that funds are flowing strongly into the derivative market, reflecting a growing optimistic sentiment among investors.

However, the funding rate remains very low, at only 0.0013%, and fluctuates around the threshold of 0 – indicating that the market is not truly leaning towards one side, and investor sentiment is still polarized. In a normal context, when the bulls dominate, they are willing to pay funding fees to compensate for the difference between the spot price and the derive price due to a surge in buying demand.

AAVE derivative data | Source: CoinGlassNotably, in the past 24 hours, the total value of short positions (Short) that were liquidated reached 625,580 USD, nearly 5 times higher than the 125,160 USD from the long positions (Long) that were liquidated – indicating that the bears are under significant loss pressure. However, the long/short ratio currently stands at 0.9736, reflecting that short positions still hold a dominant position in the market.

AAVE aims to surpass the $300 mark

The price of Aave has maintained a slight increase of nearly 1% at the time of writing on Wednesday, following an impressive increase of 3.45% from the previous session. This DeFi coin has just set its highest peak of the month, marking a strong bounce back after the V-shaped reversal pattern that appeared at the end of June.

The current uptrend is initiated from the 50% Fibonacci retracement level at $213.55 — determined from the peak on December 16 at $399.85 down to the bottom on April 7 at $114.05. AAVE is currently approaching the important resistance zone at the 78.6% Fibonacci level, corresponding to $305.71.

If the price can close above this level, the bounce back trend is likely to extend back to the 52-week high at $399.85 — a mark that indicates the next long-term bullish cycle.

Daily AAVE/USDT Chart | Source: TradingViewTechnically, the indicators are reinforcing the positive trend. The Relative Strength Index (RSI) is at 60 and continues to trend towards the overbought zone, indicating that bullish momentum still has room to grow. At the same time, the MACD indicator is also sending optimistic signals with blue histogram bars rising above the 0 line – a clear sign of dominant buying pressure.

However, in the correction scenario, AAVE may revisit the support threshold at the 50-day exponential moving average (EMA), currently around $258.71.

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