AAVE has been enduring considerable volatility after the exploit involving KelpDAO on April 18. The attackers leveraged stolen assets as collateral on Aave V3, leading to a significant borrowing of approximately $196 million in wrapped ETH, thus causing a backlog of bad debt for the protocol.

In the immediate aftermath, Aave experienced a dramatic reduction in deposits, with nearly $8.45 billion exiting within just 48 hours. The price of AAVE has fallen by 17%, now trading around the $92 mark.

Panic or Opportunity?

Despite these setbacks, CryptoQuant flagged critical trends emerging from market analytics. The firm noted that Aave’s Spot Average Order Size, which assesses the average size of spot trades, showed considerable activity in the “Big Whale Orders” segment. This could mean increased involvement from large investors.

Historical trends indicate that such whale behaviors frequently coincide with market price bottoms for AAVE, observed during the 2022 bearish market and again in early 2025.

While these patterns do not guarantee immediate recoveries, they tend to signify favorable investment zones.

Currently, sentiment indicators reflect significant fear levels reminiscent of the 2022 downturn, and once again, whale order sizes have risen, indicating potential accumulation. CryptoQuant emphasized that while the future remains uncertain, these conditions previously drew in strategic investors.

Moreover, the firm highlighted the importance of monitoring Aave’s Umbrella reserve coverage concerning the significant $196 million deficit and whether substantial whale activity persists within the $85 to $95 price range.

Aave Liquidity Crisis

Looking at the bigger picture, crypto analyst Duo Nine characterized Aave’s condition as exceedingly strained following the exploit. Major markets reached 100% utilization, barring users from withdrawing their funds. This liquidity drain resulted in significant exits by large investors in the aftermath of the rsETH incident.

Consequently, the inability to withdraw also curtailed the protocol’s liquidation capabilities if asset prices fluctuated sharply, raising the risk of accumulating further bad debt.

Efforts to pull new liquidity into the system are thwarted, often disappearing within moments. As conditions evolve, stakeholders will need to remain vigilant about the implications of whale movements on AAVE’s future stability.