AAVE Drops 27% After KelpDAO Hack — More Pain Ahead or Buying Opportunity?

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• AAVE dropped sharply after the KelpDAO exploit, with whales exiting at a loss.
  
• Rising exchange inflows and bearish indicators signal continued sell pressure.
  
• Recovery above $100 is possible, but downside risks toward $85 remain.

The fallout from the recent KelpDAO exploit has rippled across the DeFi market, with Aave (AAVE) taking a notable hit. The token dropped sharply from $118 to a low of $86, breaking key psychological levels before staging a modest recovery. At the time of writing, AAVE is trading near $95, up slightly on the day, but broader sentiment remains fragile.

The decline comes amid a wider crypto market characterized by cautious optimism, as Bitcoin (BTC) continues to consolidate following recent volatility.

Whale Activity Signals Weak Confidence

On-chain data suggests that large investors have been actively exiting positions rather than accumulating. Before the exploit, whale activity in AAVE had slowed significantly. However, following the incident, large holders returned — primarily to sell.

Notably, a long-term whale moved over 32,000 AAVE tokens to a major exchange and exited at a significant loss. Selling during a downturn often reflects declining confidence among institutional or high-net-worth investors, reinforcing bearish sentiment.

This wave of sell-offs between the $114 and $90 range highlights a broader shift: whales appear more focused on risk reduction than positioning for a rebound.

Rising Sell Pressure Across the Market

The bearish trend isn’t limited to whales. Exchange data shows a sharp rise in inflows, indicating that more investors are moving tokens to sell rather than hold.

AAVE’s exchange netflow surged recently, reaching levels last seen in early February. At the same time, the exchange supply ratio climbed to multi-month highs — a sign that sell-side pressure is outweighing demand.

Technical indicators confirm this trend. The Relative Strength Index (RSI) has dropped below 50, signaling growing dominance by sellers. Momentum metrics further suggest that downside risk remains, with analysts eyeing a potential retest of the $90 level or even $85 if pressure continues.

Macro Conditions Keep Crypto Market in Check

Beyond AAVE-specific factors, the broader crypto environment remains uncertain. Bitcoin’s recent rebound of nearly 12% has improved sentiment slightly, but the market remains in a consolidation phase.

Institutional inflows, particularly through ETFs, are helping absorb selling pressure in Bitcoin. Meanwhile, macroeconomic shifts — including liquidity injections and easing financial conditions — are quietly supporting risk assets.

However, investors remain cautious. Rising short positions and profit-taking behavior suggest that many are hesitant to fully re-enter the market.

Also Read: Aave and Bitcoin at Critical Levels: Could $146 and $72K Be Next?

Despite ongoing pressure, a short-term recovery isn’t off the table. If buying momentum returns, AAVE could reclaim the $100 level and potentially target $108.

For now, the market appears balanced between cautious buyers and persistent sellers. The next move will likely depend on whether demand strengthens — or if sell pressure continues to dominate.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.