AAVE Leads Crypto Recovery — Breakout Sets Stage for 80% Price Rally

Key Takeaways

• AAVE unveiled a new tokenomics proposal, Aavenomics.
• The AAVE price is breaking out from a descending wedge.
• Will AAVE break out, and how long will the rally continue?
• Interested in buying or selling AAVE coin? Read our review of the best exchanges to buy and sell AAVE.

The AAVE price bounced alongside the rest of the crypto market on March 2 when U.S. President Donald Trump announced a strategic crypto reserve. However, most gains were retraced the next day as tariffs on Canada and Mexico kicked in.

However, AAVE has been resilient. On March 4, it initiated another bounce, attempting to break out from a descending wedge pattern.

Will this breakout be successful, and how long will the AAVE rally last? Let’s look at the charts and find out.

AAVE Tokenomics Proposal

A new tokenomics proposal called Aavenomics was posted on the Aave DAO . It is framed as one of the most important proposals in history, reshaping revenue distribution, updating tokenomics, and outlining an economic framework for Aave’s future.

One of the main focuses is replacing the current safety module with a hybrid staking system that will improve secondary liquidity incentives. Additionally, the proposal suggests reallocating $65 million worth of AAVE from the LEND migration contract to a buyback and distribution program.

The newly created Aave Finance Committee will manage the buyback and distribution program, starting with a $1 million per week AAVE acquisition for the first six months.

AAVE Price Breakout

The 12-hour time frame AAVE chart gives a bullish prediction. There are multiple reasons for this. Firstly, the price trades inside a descending wedge, a bullish pattern.

AAVE is close to the pattern’s conclusion, making a breakout likely.

Secondly, there is a completed five-wave downward movement (red) inside the pattern, signaling the decline is over.

The symmetrical triangle (dotted) in wave four confirms this is the correct count.

Finally, there are bullish divergences (orange) in both the Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD), making a breakout more likely.

If one happens, the AAVE price could increase by another 35% and reach the horizontal and Fibonacci resistance at $285.

Corrective Rally

While the daily time frame predicts an AAVE price breakout, the weekly one is not as bullish. On the contrary, it suggests that AAVE completed a W-X-Y structure starting in 2022.

Thus, it suggests AAVE’s bullish part of the market cycle is over, and a considerable decline will follow.

The correction ended very close to the 0.618 Fibonacci retracement resistance level of $435, often acting as the top of the increase is corrective. Then, the rejection triggered a sharp decline.

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This cycle’s entire upward movement has been corrected if the count is accurate. So, it is likely a long-term B wave (red), meaning the price will not reach a new all-time high this cycle.

Rather, AAVE has begun a long-term decline in wave C, eventually falling below its 2023 lows.

Technical indicators support this possibility since the Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) are declining and have given bearish triggers.

The RSI fell below 50, while the MACD made a bearish cross (black circles).

As a result, the previously proposed breakout is likely to be a relief rally that eventually leads to a lower high.

Alternatively, breaking out above the cycle high of $400 will invalidate this bearish outlook and lead to new highs, but this currently seems unlikely.

AAVE to $285

The AAVE price bounced on March 4, coinciding with the release of a new tokenomics proposal, Aavenomics.

While AAVE could surge to $285, the increase will likely be a relief rally that creates a lower high.