Whales Circle AAVE Amid Confusion: Is This Another Market Bottom Sign?

Fears surround AAVE following exploitation-driven outflows, but historically below-market whaling orders are resurfacing.

Following the April 18 KelpDAO rsETH bridge exploit, AAVE is undergoing one of its most volatile periods in recent history. Attackers used the stolen assets as collateral on Aave V3 to borrow nearly $196 million in wrapped ETH, leaving the protocol in bad debt.

Almost $8.45 billion was immediately withdrawn from the platform within 48 hours, marking a significant drop in deposits. The AAVE token has fallen by 17% since then, currently trading at the $92 level.

Panic or luck?

Despite these developments, CryptoQuant has revealed major trends emerging in chain and market data. The analytics firm's Aave Spot Average Order Size metric, which measures the volume of spot trades executed by dividing total volume by trade count, showed higher readings in the “Big Whale Orders” category. This was indicative of increased participation from large investors.

Historical data through the end of 2022 indicates that these types of whaling activity clusters consistently align with local or broader market bottoms at AAVE prices. These instances are observed in 2022 bear market lows, mid-2023 consolidation phases, 2024 corrections, and early 2025.

While these patterns do not guarantee an immediate reversal, they typically mark danger zones.

As sentiment indicators reflect heightened levels of fear similar to those seen during the 2022 recession, whaling order volumes have risen again, suggesting that they may accumulate. CryptoQuant further added that the outcome is uncertain, but explained that similar conditions have attracted strategic buying in the past.

The company said market participants should monitor Aave's Umbrella Reserve coverage for a $196 million shortfall and continued high-whaling activity in the $85 to $95 range.

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Ave liquid crisis

Highlighting, crypto analyst Duo Nine described the situation on Aave as extremely strained after the exploit, stating that many major markets were 100% leveraged, effectively preventing users from withdrawing their funds. Duo Nine explained that following the KelpDAO-related RSETH incident, which rapidly depleted liquidity in major pools such as ETH, USDT, and USDC, large investors withdrew billions from the protocol. As a result, users who did not log out earlier could not access their assets.

The ETH market is 100% leveraged, which not only prohibits withdrawals but also limits the protocol's capacity if the price moves significantly, increasing the risk of further bad debt. Over time, the same issue spread to stablecoin markets, which kept more funds locked up. According to a market analyst, some users tried to get out of their locked positions by borrowing and taking losses, while others used platforms like Uniswap to sell tokenized assets.

Any new fluid that entered the system was quickly removed, often within seconds.