4 reasons behind Aave’s rally to 40-month highs

Aave has become one of the top gainers among the top 100 crypto assets, posting significant gains amid market-wide bullish momentum.

Aave (AAVE) is up 34% in the last 24 hours and is trading at $355 at the time of writing. The market cap of the leading lending protocol’s native token has risen to $5.3 billion, making it the 31st largest cryptocurrency.

Source: crypto.news

This is the first time Aave has surpassed the $350 barrier since the end of August 2021.

First, the broader crypto market, including Bitcoin (BTC), started to rise immediately following Wednesday’s U.S. Consumer Price Index report.

According to Investing.com data, the US inflation rate in November was 2.7% on an annual basis, as expected; It increased by 0.1% from 2.6% in October.

Bitcoin then broke the $100,000 mark again, with global crypto market capitalization increasing by 4% to $3.82 trillion, according to data from CoinGecko.

Secondly, a number of new developments have brought a bullish trend to the second largest decentralized finance protocol – Aave’s DeFi total valuation hovers around $22 billion.

Balancer announced that it will upgrade its decentralized exchange and automated portfolio management protocol to v3 in partnership with Aave, Crypto.news reported on Wednesday. The lending protocol will allow users to maximize yield by optimizing Balancer v3’s liquidity pools.

Additionally, Aave is preparing to operate on Linea, a zk-rollup network powered by Consensys, after receiving the green light from its community. This will allow Aave to scale up and increase transaction volume with lower fees.

Third, President-elect Donald Trump’s DeFi project World Liberty Financial accumulated $1 million worth of AAVE tokens at an average price of $297.8 earlier today.

Finally, Aave’s whale accumulation strengthened as the price fell below the $260 level on Monday. Large holder net inflows to the asset reached 103,610 AAVE on December 9, according to data from IntoTheBlock.

AAVE whale net flow | Source: IntoTheBlock

Sudden increases in whale inflows often trigger fear of missing out among retail investors, potentially causing prices to rise.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.