Bullish momentum driven by the influx of dormant tokens

AAVE, the native token of decentralized crypto-lending platform Aave, topped $363 after rising roughly 30% over the past day.

This is the first time since 2021 that the asset has registered a crucial milestone in a rally fueled by a large wave of recirculating coins.

AAVE’s main stakeholders circulate inactive coins

As Santiment highlighted in his latest analysis, this increase is accompanied by a significant drop in the “Average Age of the Dollar Invested,” a key indicator that suggests previously dormant tokens are returning to circulation by major stakeholders. This influx of active coins plays an important role in driving the bullish momentum for AAVE.

Additionally, the on-chain crypto analytics platform noted that active traders have experienced massive returns, with 30- and 365-day gains of over 96% and 290%, respectively.

However, Santiment warns that the sustainability of the current rally depends on whether the major holders continue to circulate older tokens. If the whales decide to stop their activity, a setback could occur. In this scenario, the bullish phase of AAVE runs the risk of cooling off.

Adding another layer of information, Spot On Chain reported that Blockchain Capital, a prominent early investor in AAVE, deposited a significant amount of the token (16,964) into FalconX after two years of inactivity. That deposit is worth about $5.06 million.

It is important to note that Blockchain Capital acquired a total of 233,256 AAVE between August 2020 and March 2023, at an average price of $82.9. The venture capital firm still holds a substantial amount: 216,292 AAVEs, valued at nearly $79 million.

This large deposit, occurring after a prolonged period of inactivity, could indicate that the whales are re-engaging with AAVE, aligning with Santiment’s observation that the movement of older tiles is essential to maintain the upward trend of the asset.

Catalysts behind the growth of AAVE

Several key developments are contributing to the recent increase in AAVE prices. First, Decentralized Exchange (DEX) Balancer released its V3 update which introduces improved liquidity optimization, increased trading volume and advanced developer tools.

Aave has partnered with Balancer to integrate its automated permissionless market maker technology with the former’s performance market infrastructure, creating 100% leveraged pools. This collaboration is expected to strengthen AAVE’s liquidity and trading activity, further supporting its price growth.

In addition, the upcoming launch of Aave on Linea, a zk-rollup network backed by Consensys, is another key factor. With community approval, the platform will take advantage of Linea’s scalability and low transaction fees, allowing it to process more transactions efficiently and at a lower cost, thereby increasing adoption.

Finally, the recent $1 million acquisition of AAVE by President-elect Donald Trump’s DeFi project World Liberty Financial has added to the momentum. The project bought AAVE tokens at an average price of $297.8, indicating strong institutional confidence in AAVE’s prospects.

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