AAVE Faces Key Support Breakdown at $125 Could Lead to 40% Downside Risk

3 mins mins

Key Insights:

AAVE trades near $125 support as analysts warn a breakdown could open downside toward $80 levels.
Price shows distribution signs after 20% squeeze, with daily closes below $125 signaling downtrend risk ahead.
Aave stablecoin growth continues as PYUSD deposits on the protocol reach about $400 million.

*The token Faces Key Support Breakdown at $125 Could Lead to 40% Downside Risk*

AAVE is at a critical point in its price movement. The cryptocurrency recently showed signs of weakness, with a significant breakdown at the $125 support level. If this level fails to hold, there could be a potential downside risk of up to 40%.

Aave is trading at $122 with a 24-hour trading volume of $497.63M. As of the latest updates, it has seen a slight decrease of 2.76% over the last 24 hours.

AAVE Price movement and Risk Below $125

The token saw a brief surge of around 20% after initially breaking below the $164 support level. Despite the short-lived rally, the price eventually hit the $125 mark, confirming the earlier analysis. The token is now trading at the crucial support level, with the regression channel Point of Control (POC) serving as the baseline. This level is essential for the token’s price action in the near term.

“AAVE’s price behavior suggests that it is currently in a distribution phase rather than accumulation,” analysts have noted.

If the token fails to maintain the $125 support, the next phase could be a steady decline. This would open the door to more selling pressure and a possible move toward the $80 region. The pattern may involve periods of downward movement followed by consolidation, with the price continuing to drop in a slow grind.

Aave’s Strategic Growth in Stablecoins

Despite the price challenges, the token has been making strides in the stablecoin sector. The token’s recent partnership with PYUSD on the Ethereum blockchain has brought attention to its role in the growing stablecoin market. Since its integration as collateral in October 2025, PYUSD deposits on Aave have surged, ballooning to nearly $400 million.

PYUSD was onboarded as collateral on Aave V3 Core Ethereum in October 2025, combined with targeted supply incentives.

Since then, PYUSD deposits on Aave have ballooned to $400 million. pic.twitter.com/bVKmKLqpNV
— Aave (@aave) February 3, 2026

The rise of stablecoin usage on Aave shows its continued influence in the decentralized finance space. While the price action of the token remains under pressure, the protocol’s long-term growth remains tied to its strong position within the stablecoin market.

The cryptocurrency market has been volatile, and the token is not immune to these fluctuations. Traders are closely watching the $125 level as it will likely determine the short-term direction of the token. If the price dips further, it may trigger additional sell-offs and magnify the downside risk.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.