Aave, a prominent DeFi lending protocol, witnessed its highest-ever liquidation of $300 Million last week as the ETH price dipped 25%.

The price of AAVE token experienced a brief respite from selling pressure on Monday’s trading session, registering a 3% rise to $94. But as the pioneer cryptocurrency, Bitcoin, encountered difficulties in sustaining above the $60,000 level, the altcoin market faced an intense overhead supply, indicating the possibility of a prolonged downturn.

AAVE Price Loses Key Support As Massive Liquidations Sweep the Market

Aave, a leading decentralized finance lending protocol, witnessed its highest-ever liquidation of $300 Million last week as the ETH price took a 25% dive. The downward trend, bolstered by a broader market sell-off, triggered major liquidations of stablecoin loans that were collateralized by wrapped staked ETH (wstETH). Amid this unprecedented event, the AAVE price slipped below the $100 support.

However, a recent tweet from Intotheblock highlights the volatility that also benefited the protocol by generating $6 million in profits for the Aave DAO. The event underscores the risks and robustness of decentralized finance platforms in handling extreme market conditions.

Aave witnessed its largest-ever liquidations this week, with nearly $300M liquidated. Most liquidations stemmed from stablecoin loans against (wst)ETH collateral as ETH dropped by 25%.

The protocol remained strong, adding $6M in profits to the Aave DAO. pic.twitter.com/KPBubM0t9C

— IntoTheBlock (@intotheblock) August 10, 2024

Moreover, the AAVE network has experienced a significant 28.83% rise in short-term traders over the past month. This surge suggests an influx of new users and short-term speculators entering the market, likely attracted by recent market volatility and opportunities for quick gains.

AAVE Price Poised For Prolong Downfall

The AAVE price witnessed a high momentum correction amid the recent market sell-off, displayed by a V-top reversal in the daily chart. The bearish turnaround plunged the asset from $118 to $93.7, accounting for a 20.6% loss.

The falling price recently plunged below the daily Exponential moving averages (20, 50, 100, and 200), indicating sellers are strengthening their grip over the altcoin. If the sustained selling, the AAVE price could plunge 14% to hit the long-ascending trendline at the $80 mark.

This dynamic support since September 2023 creates a high accumulation, and a break below it could trigger a major downfall.

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