Aave Bounces 29% — Dead Cat or Real Recovery?

Aave just printed a 29% bounce. DeFi Twitter is celebrating. But zoom out and the picture tells a very different story.

The Bounce Looks Good On Paper

After weeks of bleeding, AAVE ripped from local lows with serious volume. Short-term traders who caught the bottom are sitting pretty. The 4H chart shows a clean reclaim of the 20 EMA.

But The Weekly Is Still Ugly

On the weekly timeframe, AAVE is still in a clear downtrend. Lower highs, lower lows. The 29% bounce barely registers as a blip on the macro chart. Historically, these sharp bounces in downtrends are classic dead cat bounces — they trap eager buyers before the next leg down.

The DeFi Narrative Problem

DeFi as a sector has been underperforming. TVL across major protocols has been declining. And with ETH itself struggling at support, it's hard to see how DeFi tokens outperform in the near term. That said, Aave remains the king of lending. V3 is solid tech, and if DeFi summer 2.0 ever comes, AAVE will be one of the first to move.

The Play

If you are already holding, this bounce is a chance to reduce risk. If you want to enter, wait for a retest of the breakout level. Chasing a 29% candle in a downtrend is how portfolios get rekt. Patience pays. Always.