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AAVE surged by as much as 25% today, driven by increasing optimism within its ecosystem and a significant uptick in trading activity.

AAVE Hits Multi-Month High

The price of AAVE climbed to an intraday high of $269 on May 20 during the afternoon Asian trading session. This marked its highest level since February, solidifying its position as one of the top-performing cryptocurrencies in the market. The token has now gained over 132% from its April lows, showcasing strong bullish momentum.

Trading Volume and Futures Demand Soar

The rally was accompanied by a notable spike in trading volume, with over $800 million worth of AAVE traded today. This represents its most active trading day since early March. Additionally, futures open interest for AAVE reached an all-time high of $569 million, underscoring robust demand from derivatives traders. The token has maintained a positive funding rate for two consecutive weeks, signaling that the majority of traders are betting on further upside potential. Currently, long traders are paying short traders, indicating strong market confidence.

Regulatory Developments Boost Sentiment

Market participants appeared to welcome progress on the proposed GENIUS Act, which recently passed a key procedural vote in the U.S. Senate. The bill aims to establish a regulatory framework for stablecoins, a critical component of decentralized finance (DeFi) protocols like Aave. Given Aave’s reliance on stablecoins such as USDC, DAI, and its native GHO, regulatory clarity could attract more institutional investors and enhance overall confidence in its ecosystem.

Aave’s Dominance in DeFi Expands

AAVE has further cemented its position as the leading DeFi protocol by total value locked (TVL). According to recent data, Aave’s TVL has surged nearly 40% over the past month, reaching $40.7 billion and far outpacing competitors like Lido, which holds $23.3 billion in TVL. This impressive growth is also translating into substantial revenue, with Aave generating over $250 million in fees year-to-date, placing it among the most profitable protocols in the cryptocurrency space.

On-Chain Metrics Signal Growing Momentum

On-chain activity for AAVE is also showing positive signs. Daily active addresses have surged by 57% in the past two days, reflecting increased user engagement. Additionally, weighted social sentiment has flipped positive, indicating growing bullish sentiment among market participants.

Technical Indicators Point to Continued Growth

From a technical perspective, multiple indicators suggest that AAVE may see further upside. On the 1-day USDT chart, the Aroon Up indicator is at 100%, while the Aroon Down sits at 0%, confirming dominant bullish momentum. The Chaikin Money Flow (CMF) Index is at 0.26, signaling strong capital inflow into the token.

A potential golden cross is forming on the daily chart as the 50-day and 200-day moving averages move closer to a crossover, a classic bullish signal.

The token is also approaching the 61.8% Fibonacci retracement level at $271.35. A breakout above this level could pave the way toward the 50% retracement level at $347.19, representing a potential 30% gain from current levels. However, if a pullback occurs, key support is expected near $226.45, which could serve as a strong bounce zone before the uptrend resumes.

At the time of writing, AAVE is trading around $267 per coin.

Disclosure: This content is for educational purposes only and does not constitute investment advice. Readers are encouraged to conduct their own research before making any financial decisions.

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