AI Relief Rally Meets BTC Weakness: Market Divergence and Aave's Growth Momentum

Source: Blockworks Original Title: AI relief rally meets BTC drag Original Link: https://blockworks.co/news/ai-relief-rally

Market Performance Divergence

Equities rallied sharply yesterday, with the Nasdaq up 2.15% and the S&P 500 up 1.39% following Nvidia’s strong earnings and $65 billion Q4 revenue guidance. However, crypto moved in the opposite direction: BTC fell, most sectors closed red, with only a few outliers holding ground.

Despite the equity recovery, BTC showed continued weakness, declining 1.66% on a day when the Nasdaq, S&P 500, and Gold were all positive. Nvidia’s results eased AI bubble concerns, with the chipmaker beating expectations on data center demand and projecting Q4 revenue of $65 billion versus the $61 billion estimate. With Nvidia shares up 5% after-hours, tech-heavy indices should see continued relief. However, BTC’s case is less clear, with large Bitcoin holders continuing to sell as BTC struggles to reclaim the $100,000 level.

Sector Performance

The weakness in BTC spread across the crypto market, with nearly every sector closing in red. Memes were a rare outlier, rising 0.2% on the day, driven by strong performance in specific tokens. Layer 2 solutions held up better than most, down only 0.5%.

Starknet stood out significantly, jumping 20.8% on the day and 81% on the week after announcing plans to launch Ztarknet, a Starknet L2 designed for privacy-focused applications.

On the downside, Crypto Miners fell 5.9% despite Nvidia’s strong results. The No Revenue index dropped 4.5%, with certain tokens down 3-5% on the day. Even tokens with strong fundamentals were not spared.

Aave’s Fundamental Growth

During challenging market conditions, some teams continue shipping and strengthening fundamentals. Aave stands out, having rolled out both a new Aave App and Aave v4 this week.

Total value locked in Aave has grown from $20.5 billion to a peak of $74 billion in early October. Even after recent pullbacks bringing it to $53.8 billion, Aave is still up approximately 2.6x year-over-year, demonstrating sustained protocol demand.

While the Aave token price drifts near April lows, weekly revenues tell a different story—approximately 2.6x higher than April levels. This suggests token valuation compression driven more by sentiment than fundamentals.

The Aave App Launch

The new Aave App aims to remove complexity and provide everyday users with an intuitive savings experience. The protocol is offering interest rates up to 6.5% on USD deposits, well above traditional savings account ranges of 0.40-3.50%.

Onboarding is designed for accessibility, with deposits supported through bank accounts and debit cards. Balances are advertised as insured up to $1 million through Relm Insurance, a firm specializing in fintech, digital assets, and emerging industries. The app is available in early access on iOS with Android support coming.

However, the insurance coverage deserves scrutiny. While Relm covers smart contract exploits, stablecoin depegs, oracle manipulation, and governance attacks, policy limits and Relm’s balance sheet strength remain unclear. For comparison, insuring $1 million of USDC on Aave v3 through alternative providers costs approximately 1.9% annually.

Key questions remain about insurance details, cost structure sustainability, and how long Aave intends to subsidize the gap between the 6.5% app yield and the 4% APY available in stablecoin markets on Aave today.

Despite these uncertainties, this moment feels significant. With the neobank narrative gaining momentum and Aave v4’s arrival, the protocol is positioned for potential major growth.

Solana’s Equity Trading Ecosystem

Solana has positioned itself as a platform purpose-built for institutional trading, with the vision of creating a “permissionless blockchain-based market infrastructure.” Since June 2025, over 60 tokenized stocks from major US companies and ETFs (Apple, Nvidia, S&P 500) are available for non-US persons to trade like standard tokens.

These tokenized stocks have gained significant traction on Solana, reaching $143 million in AUM compared to $6.3 million for the EVM-based alternative. Institutional adoption signals are emerging through major entities tokenizing their equity.

However, on equity perpetuals, Solana appears to be lagging. While Solana advances synthetic perp capabilities through improved latency infrastructure, a competing platform’s HIP-3 mainnet and fee incentives have changed the landscape. With certain DEXs clearing $400 million in daily volume, questions arise about competitive positioning.

Competitive Dynamics

The main challenge for Solana is the distribution advantage held by competing platforms through integrated wallet partnerships. Users can now directly access equity perps through major wallet interfaces, reducing friction typically provided by ecosystem proximity.

However, Solana retains a potential structural advantage: proximity to tokenized spot tokens. This simplifies hedging between spot and perpetuals for market makers and could enable delta-neutral strategies (collateralizing spot tokens to short perp equivalents). This composability advantage could address a critical problem in perps markets: high carry costs.

Drift and similar protocols focusing on composability are well-positioned to capitalize on this advantage. However, most Solana protocols have not yet integrated perpetual equities, so execution on this theoretical advantage remains to be seen.