Aave (AAVE) experienced a significant rally of over 9% in the last 24 hours, driven by several key factors that have sparked renewed interest in the cryptocurrency. The token surged to an intraday high of $274.91 on February 5th, bouncing back from recent losses that saw it drop to around $253.44 during a broader market downturn.
Currently boasting a market cap of over $4.1 billion and a circulating supply of 15,060,878 tokens, AAVE has seen a daily trading volume of over $853 million. Despite its recent gains, the token remains 58% below its all-time high of $661.69, achieved in May 2021.
There are three main reasons behind AAVE’s recent rally. Firstly, the Aave community successfully completed a proposal to launch AAVE V3 on the Sonic blockchain, an EVM-compatible network. With overwhelming community approval, the upcoming V3 deployment on Sonic is expected to enhance Aave’s adoption and revenue potential.
Secondly, Aave demonstrated its resilience during the recent market turmoil by processing $210 million in liquidations following a flash crash on February 3rd. This event, which resulted in approximately $2.2 billion being wiped out from the crypto market, tested Aave’s ability to handle extreme volatility without incurring additional bad debt.
Furthermore, whale activity surrounding AAVE has increased significantly, with notable purchases being made by prominent investors. For instance, a smart whale recently acquired 102,259 AAVE tokens worth around $27.5 million in staked ETH. Additionally, data shows that whales acquired 62 million AAVE between January 29th and February 1st.
The influx of large-scale purchases by whales has not only attracted retail investors but also prompted significant capital outflows from centralized exchanges. Coinglass data indicates that over $363 million worth of AAVE has been moved out of centralized exchanges in the past week.
In terms of price action, technical indicators suggest that AAVE could continue its rally towards retesting its January high of $375, representing a potential 38% increase from its current price. The MACD lines, Chaikin Money Flow index, and Relative Strength Index all point towards a bullish trend supporting further gains for the altcoin.
Moreover, the futures market for AAVE indicates a potential short squeeze scenario, with open interest rising by 10% to $240 million and the weighted funding rate turning negative. If buying pressure persists due to recent whale accumulation, short holders may face liquidation, leading to a cascade of buying activity that could drive up the token’s value.
In conclusion, Aave’s recent rally is fueled by a combination of community-driven initiatives, resilience during market turmoil, increased whale activity, and positive technical indicators. As the cryptocurrency market continues to evolve, AAVE remains a prominent player with the potential for further growth and adoption.