Aave Labs has announced a new governance initiative that could redefine the future direction of one of the major lending protocols in the cryptocurrency industry.
On paper, this change seems like a sound initiative. However, due to investor behavior, the AAVE price has not reflected this.
Aave, introducing a new governance model
The proposal named “Aave Will Win” demands the Aave DAO to approve a comprehensive roadmap focused on the upcoming V4 upgrade. If passed, V4 will become the core infrastructure for the next phase of the protocol and will establish a system that directly allocates 100% of the profits from all products developed by Aave Labs to the DAO.
Despite the launch of a new governance model, the AAVE price is still under selling pressure. According to the Money Flow Index (MFI), the token is currently in an oversold range. Recent figures suggest that selling pressure due to macro factors has peaked after several instances of continuous fund outflows.
Historically, AAVE's price has often rebounded after passing through oversold phases. Oversold signals reflect a saturation of selling, and during these times, buying pressure gradually increases. However, the overall bearishness of the cryptocurrency market and conservative investor sentiment are complicating this recovery phase more than before.
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The exchange net position change data shows that selling pressure continues to dominate. The net inflow to exchanges indicates that holders are moving AAVE to trading platforms. This behavior typically suggests a purpose of selling rather than holding.
If outflows remain strong and inflows to exchanges continue steadily, the timing for a rebound could be further delayed. Even positive protocol changes have failed to trigger immediate upward momentum. Market participants are focusing more on liquidity conditions and risk preferences rather than governance reforms.
As of the time of reporting, AAVE's price is trading at $111, remaining above the 23.6% Fibonacci level of $109. This range is widely recognized as a support level in a bear market. Maintaining this support is crucial to preventing structural vulnerabilities.
Mixed technical signals suggest that AAVE may enter a correction above $109 soon. The price may continue to consolidate below the $119 resistance level, during which time momentum could stabilize. However, if it decisively breaks below $109, AAVE may drop below $100.
If selling pressure eases and investor sentiment recovers, AAVE may rebound at $109. A breakthrough of $119 will signal an improvement in market sentiment. A break above $128 could lead to $136, and the previous bearish outlook may turn into a price rally.