The Aave token has experienced a 7% gain in the past 24 hours amid a surging crypto market, with the DeFi protocol looking to reassure users following a dramatic trading mishap.

AAVE price is up and hovers around $119 after the Aave Labs team released a comprehensive post-mortem, alongside the launch of a new protective feature.

But while another leg up above $120 looks likely, geopolitical and macro headwinds continue to dictate sentiment.

A surge in open interest in Bitcoin also suggests a potential downside that could permeate altcoins.

The Aave team has offered an official post-mortem after a trader executed a swap of roughly $50.4 million in USDT for AAVE tokens, suffering a staggering 99% price impact.

Despite prominent slippage warnings, the user failed to override the impact and ended up with just $36,000 worth of Aave, an event that reignited chatter on DeFi vulnerabilities.

In a report, Aave Labs affirmed that no exploit took place and that the protocol was not impacted.

According to the update, the trade followed the user's signed parameters amid standard market dynamics.

However, having assessed the incident, the team has taken immediate steps to protect users from any further high slippage incidents.

That's what "Aave Shield," a protection feature designed to dynamically cap slippage on high-value swaps, is about.

“By default, Aave Shield automatically blocks any swap with a price impact greater than 25%. This creates a high-friction guardrail for users, requiring them to have to manually visit the Settings menu and intentionally disable the Aave Shield protection in order  to proceed with a high-risk trade,” the team wrote.

Aave Shield gives users a new layer of protection against “accidental confirmations.”

However, it maintains the protocol’s permissionless operations for advanced users.

AAVE price dropped to near $110 last week as the DeFi protocol hit crypto headlines after a user reportedly lost $50 million in a swap incident.

However, with BTC and ETH up, AAVE's price has followed suit to hover 12% up over the past week and roughly 8% in the last 24 hours.

Intraday gains range $111-$120 as of writing on March 16, 2026 suggests the altcoin’s rebound has been sharp.

Bulls haven’t broken out of the broader descending channel, but technicals reflect optimism.

If there is a breakout above the 50-day moving average, with RSI near 55 and rising, the next key target could be at the 100-day SMA ($144). The daily MACD also offers a bullish outlook.

On the downside, major support remains at $105 and $99.

Key to this perspective could be the price trajectory of BTC and ETH amid the US-Iran war.

All eyes will also be on the Fed, with traders betting the US central bank won't cut rates at its meeting this week.

The post Why is AAVE rising after a $50M crypto swap disaster? appeared first on Invezz

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