AAVE price pattern signals a 50% jump ahead of the Umbrella update

The AAVE token has surged by 135% from its April low, forming a V-shaped recovery and suggesting a potential 50% rally toward its 2024 high.

AAVE (AAVE) price soared to $270 on Tuesday as Bitcoin (BTC) and other altcoins jumped. Its rally pushed its market capitalization to over $4 billion.

AAVE jumped as the total value locked in its network rose to $25.5 billion. IThis figure has increased by over 24% in the last 30 days, reinforcing AAVE’s status as the largest protocol in the decentralized finance sector. Active loans on the platform climbed to $16.2 billion, up from the year-to-date low of $11.2 billion.

The network continues to generate substantial fee revenue amid rising activity. According to DeFi Llama, AAVE earned over $1.52 million in the past 24 hours and $42 million in the last 30 days. This trend is expected to persist as demand for decentralized lending grows.

AAVE price also jumped as the community members voted in favor of launching Aave Umbrella. Umbrella is a decentralized risk mitigation solution designed to protect liquidity suppliers from bad debt. Under this system, users can stake their Aave aTokens to earn rewards, with the caveat that their staked tokens may be slashed if bad debt materializes.

Umbrella will also introduce a deficit offset mechanism. This feature defines a configurable threshold for each asset, indicating how much of any shortfall will be covered by the Aave DAO treasury before slashing is applied to aToken stakers. The Umbrella mechanism is scheduled to activate on Thursday.

AAVE price technical analysis

The daily chart shows that AAVE has climbed from a low of $114.30 in April to a recent high of $265. The price action has formed a golden cross pattern, where the 50-day moving average crossed above the 200-day moving average, a technical indicator often associated with sustained bullish momentum.

AAVE has also completed a textbook V-shaped recovery, typically viewed as a bullish continuation signal. In addition, key oscillators such as the Relative Strength Index and the Stochastic are both trending higher, reinforcing the bullish outlook.

Therefore, the bullish momentum will likely continue in the coming weeks, with the next level to watch being at $400, up by 50% from the current level.