Market watcher Michaël van de Poppe shared a bullish note on Feb 21, saying that Aave may be showing early signs of recovery. He described the previous day’s drop as unnecessary, arguing it was driven by external ecosystem movement rather than real weakness in demand.
According to him, price action is now forming a higher low, a pattern that often appears before trend reversals. Technical analysis of chart patterns indicates that AAVE transitioned from a strong growth phase to a correction phase after reaching the $360-$380 level.
Source: X
This level was a significant point because, since then, the dominance has been of sellers, and prices have been falling to create lower highs and lower lows.
The moving average in the daily chart remained above the price, behaving as if it were a ceiling that prevents prices from rising. The momentum started to decline significantly after the significant fall in October due to strong selling pressure.
Also Read: AAVE Surges to $123: Grayscale ETF Could Ignite Rally
AAVE Holds Key Demand Zone Between $113–$123
Currently, AAVE is ranging in a demand area between $113 and $123. This area is significant because it corresponds to previous regions where accumulation took place before the previous rallies.
Buyers are slowly entering this region, as evidenced by the candle wicks and price movements that suggest selling pressure is being absorbed.
If this kind of support remains strong, it could lead to a possible rise in the price towards the declining moving average. The next level of resistance would be $140-$160.
If it breaks above that level in a daily chart, it might indicate the beginning of a new trend. However, momentum indicators remain neutral. The RSI index is in the neutral zone and has not yet indicated strong bullish divergences.
Builder Exodus Raises Governance Concerns
Apart from the price actions, ecosystem news is also contributing to the pressure. DeFi analyst Jordi stated that some of the most important technical minds from BGD Labs are leaving. They were instrumental in developing the basic infrastructure, such as V3 stability mechanisms and governance.
Source: X
The development is linked to a strategic battle over the direction of development. Some members of the community believe that the pressure to implement upgrades in the future is undermining the existing versions of the protocol.
Others believe that the internal rivalry among the development teams is leading to fragmentation. The founder, Stani Kulechov, received backlash on social media regarding discussions on funding and control of the protocol.
BGD Labs will open-source their work documents and remain available to assist with the transition process for about two months. However, the governance risk is being closely watched by traders and users.
Also Read: AAVE Faces Brutal Drop Before 19% Surge
