Aave's token plummeted 16% after a $6 billion deposit drop due to a Kelp hack exposing structural risks.

The current market state is cautious with $BTC at $63,500, $ETH at $3,100, and $BNB at $580, all down slightly in the last 24 hours.

The Kelp hack involved attackers using drained rsETH as collateral to borrow wrapped ether on Aave, revealing potential weaknesses in the DeFi lender's structure. This led to a significant drop in deposits and Aave's token price. Aave now needs to quantify the bad debt it's carrying.

The AAVE token's 16% drop impacts the broader DeFi sector, potentially affecting $LEND and $COMP. Short-term, $Aave may struggle to regain $80, while long-term, its structural integrity is questioned.

Bottom line, I'm bearish on Aave's short-term prospects due to the hack's aftermath and potential bad debt.

#Bitcoin #BTC #Crypto #Aave #DeFiRisks