Why AAVE is rallying even as Bitcoin, Ethereum, XRP lag

AAVE gains nearly 8% on Wednesday as crypto traders digest Bitcoin’s return above $87,000 after the flash crash. 

Crypto market capitalization is back above $2.9 trillion, even as institutional traders slowly lose appetite for risk assets. 

Bitcoin, Ethereum, and XRP lag and observe a slow recovery from Monday’s market crash.

Aave (AAVE), the native token of the Aave lending protocol, is rallying on Wednesday as the crypto market recovers from Monday’s bloodbath. Bitcoin (BTC), Ethereum (ETH), and XRP note small gains on the day as traders maintain a risk-averse stance in crypto, grappling with volatility concerns this week ahead of the White House Crypto Summit on Friday. 

While the crypto community prepares for the first White House Crypto Summit of its kind, enthusiasm among traders is capped. The crypto Fear & Greed Index on alternative.io shows that traders remain fearful as the indicator reads 20 on a scale from 0 to 100. 

AAVE yields nearly 8% gains for traders on the day, while the top 3 cryptocurrencies, BTC, ETH, and XRP, lag behind at the time of writing. 

Why AAVE is rallying?

AAVE recently deployed its lending markets on Sonic, a blockchain that evolved from Fantom. This marked the DeFi lending platform’s first Layer 1 expansion in 2025, part of the project’s roadmap. 

AAVE’s version 3 was deployed following the approval of the governance proposal, and the launch on Sonic Labs was followed by a gain of $33 million in total value locked (TVL) within 24 hours. 

Data from Lookonchain, an on-chain intelligence tracker, shows that large wallet investors like izebel.eth(@izebel_eth) purchased AAVE tokens worth $4.25 million on Wednesday. 

Bitcoin, Ethereum, and XRP post 1.21%, 3.15%, and 1.85% gains, respectively, on the day. The addition of XRP to the US Crypto Strategic Reserve raised concerns among traders across X, sparking debates over the relevance of the altcoin. However, the token is holding its seven-day gains of nearly 8% and continues to recover slowly. 

Ethereum hovers around the $2,100 level, and Bitcoin is inching close to resistance at the $90,000 level on Wednesday. 

AAVE eyes double-digit rally

AAVE’s Relative Strength Index (RSI) key momentum indicator in the daily chart is sloping upwards and reads 47, close to the neutral level of 50. Meanwhile, the Moving Average Convergence Divergence (MACD) shows a bullish crossover, suggesting there is underlying positive momentum in AAVE’s price trend, albeit relatively small compared to the last week of February. 

AAVE trades at $224 at the time of writing on Wednesday and steadily climbs towards the 10-day and 50-day Exponential Moving Averages (EMAs) at $251.77 and $254.04, respectively. A re-test of resistance at the 50-day EMA at $254.04 would mark over 13% gains in AAVE price. 

On the downside, the DeFi token could find support at the lower boundary of the Fair Value Gap (FVG) on the daily chart at $213. 

AAVE/USDT daily price chart 

Expert comments on crypto market recovery and impact of proposed tariffs

After the steep decline in crypto prices on Monday, crypto traders are digesting the impact of the pump and dump that followed US President Donald Trump’s strategic reserve announcement. Though Bitcoin rallied to its all-time high in January, the token recorded a 17.39% decline in February, the largest drop since 2014. 

While the market reels from over $1 billion in liquidations across derivatives exchanges, traders are fearful. 

Uldis Teraudklans, Chief Revenue Officer at Paybis, discussed the state of the market with FXStreet and what to expect. 

Teraudklans said, “Thus far this year, Bitcoin has proven more reactive to macroeconomic trends, including trade wars and interest rate trends. With large Wall Street firms now exposed to the coin, it is more susceptible to significant liquidity flows, thus contributing to its volatility. This [negative 17.39% monthly return in February] decline can be attributed to a loss of institutional appetite for risk assets, driven by the trade and tariff tensions initiated by the Trump administration. Bitcoin's correlation with the S&P 500 has further contributed to the decline. 

Bitcoin has never been a safe-haven asset—only an aspirational one. Yet, the promise remains, and with every cycle, critics revisit this so-called "failure." My perspective is that Bitcoin has consistently been a risk asset, following a long-term trajectory toward becoming a safe-haven, risk-off asset. This was true in previous cycles and remains true today.”

The expert says, “Only when Bitcoin reaches the market capitalization of gold can we seriously evaluate whether it can replace it as a safe-haven asset.”