AAVE Analysis: Price Hits $356 as Whale Activity and DeFi Updates Fuel Surge

AAVE, the native token of the decentralized finance (DeFi) protocol Aave, has experienced a price surge, reaching $356.61. 

Over the past 24 hours, the token’s price increased by 29.77%, with a 41.88% rise over the last seven days. The market capitalization of AAVE now stands at $5.35 billion, supported by a circulating supply of 15 million tokens and a trading volume of $2.06 billion in the last 24 hours.

The rally has drawn attention to whale activity and key developments within the Aave ecosystem. According to Santiment, the token’s “Mean Dollar Invested Age” saw a sharp decline, indicating that large holders are actively circulating tokens that had remained dormant. Santiment stated that this movement has “perpetuated bullish momentum for the asset.”

Despite the recent rally, market intelligence platforms warn of potential retracement risks. Santiment highlighted that high returns for 30-day (+33%) and 365-day (+109%) active traders suggest elevated risks. 

“Returns above 0% in a zero-sum game indicate higher risk than usual,” the platform noted.

Whale Activity Signals Increased Market Participation

Blockchain Capital, a prominent venture capital firm, recently made its first AAVE deposit in two years. The firm transferred 16,964 AAVE, valued at $5.06 million, to FalconX. 

This move comes after accumulating 233,256 AAVE at an average price of $82.9. Blockchain Capital still holds 216,292 AAVE, worth approximately $66 million, making it the largest non-team, non-exchange holder of the token.

Blockchain Capital (@blockchaincap) deposited the first 16,964 $AAVE ($5.06M) to #FalconX 4 hours ago, after 2 years of inactivity with the token.

As an early investor, the VC acquired 233,256 $AAVE between Aug 2020 and March 2023 from various sources, including OTC sales,… pic.twitter.com/BEPlnfvKy7

— Spot On Chain (@spotonchain) December 12, 2024

While whale involvement has boosted market activity, IntoTheBlock data indicates that large holder net flows are experiencing a decline. Over the past seven days, AAVE’s net flow fell by 89.74%, reflecting increased selling pressure. 

This trend aligns with a 30-day netflow drop of 58.53% and a 90-day decline of 289.09%. Despite these figures, whale-driven circulation of dormant tokens has contributed to AAVE’s ongoing rally.

New Developments Strengthen Aave’s Ecosystem

Aave’s price surge is further supported by recent updates and partnerships within the DeFi space. The protocol’s total value locked (TVL) has reached $22.264 billion, solidifying its position as the second-largest DeFi platform.

The recent partnership with Balancer to optimize its v3 decentralized exchange has drawn attention to Aave’s focus on enhancing liquidity pool efficiency and increasing user yields. 

Additionally, Aave’s planned launch on Linea, a zk-rollup network supported by Consensys, is expected to improve transaction throughput and reduce fees. This development was approved through a community vote and has the potential to attract more users to the platform.

As large wallets drive market momentum, the potential for selling pressure remains. A retracement could occur if whales decide to halt circulation or reduce holdings, posing challenges to AAVE’s continued upward trajectory.

FAQs:

Why has AAVE’s price surged recently?

AAVE’s price surged due to whale activity, ecosystem upgrades, and it’s expanding DeFi total value locked (TVL).

What is the role of whale activity in AAVE’s rally?

Whales circulated dormant tokens, driving bullish momentum, but recent netflow data shows potential selling pressure.

What new developments are supporting AAVE’s growth?

Aave partnered with Balancer for liquidity optimization and is set to launch on the Linea zk-rollup network.