AAVE rose to new highs, gaining 36% within 24 hours to trade at $380 per on-chain data, a price level never seen over the last 40 months. Following the surge in price, its market capitalization scaled up to 5.3 billion dollars.
Hence, this cryptocurrency ranked among the 40 leading cryptocurrencies based on market cap. The rally is significant; it’s the first time since August 2021 that this crypto asset has crossed the $350 level.
Several factors have contributed to AAVE’s outstanding performance. Here are the significant factors driving its price higher.
Wider Crypto Market Surge
The recent uptick in the price of AAVE corresponds closely to the general uptrend on the broader cryptocurrency market, which was positively impacted by the November US Consumer Price Index (CPI) report. Compared with last year, inflation is up 2.7%, a 0.1% rise from October.
The rise added to the stability sentiment in the economy, boosted investor confidence, and translated into a broader market rally, with Bitcoin crossing the $100,000 mark again. The high price of Bitcoin trickled down and pushed altcoins to new highs.
Also, the total market capitalization of the crypto industry jumped 4% to $3.82 trillion. This strong market momentum caused this coin’s price to surge 36%.
AAVE and the DeFi Ecosystem
AAVE remains the second-largest DeFi protocol after Lido, with a TVL of approximately $22 billion. Lido has a TVL of roughly $38 billion, and both protocols recorded a 4.9% and 5.5% rise in TVL over the last 24 hours.
One key development that has caused an increase in the coin’s price is its integration with Balancer, a DEX and automated portfolio management protocol. This protocol announced the release of its v3 upgrade, introducing a feature called “100% Boosted Pools” to optimize liquidity for users.
The network plays an essential role in this release by powering the first set of Boosted Pools, allowing liquidity providers to maximize their yield with minimal effort. By optimizing Balancer’s liquidity pools, AAVE will further expose itself to more liquidity and strengthen its position in the DeFi markets.
The partnership proves the network’s commitment to improving decentralized finance market efficiency and offering better returns to liquidity providers.
Whales Acquire More AAVE token
Another factor that has driven the price surge of AAVE is whale activity. AAVE has witnessed notable transactions from institutional investors, adding momentum to its price rally.
Blockchain Capital, one of the leading venture capital firms, made its first deposit of AAVE in two years, transferring 16,964 AAVE tokens (worth about $5.06 million) to FalconX. This move follows the firm’s previous accumulation of 233,256 AAVE tokens.
Even after selling part of its holdings, Blockchain Capital still holds $66 million worth of AAVE tokens. This move from a prominent venture capital firm has created a strong institutional interest in this coin, further pushing its price.
Furthermore, popular crypto market analytics platform Santiment pointed out that AAVE tokens’ “Mean Dollar Invested Age” has declined. This metric monitors the movement of tokens that have remained stagnant for an extended period.
If it declines steeply, it signifies that large holders are circulating previously dormant tokens. The circulation of these tokens has fueled and strengthened the continuation of the coin’s bullish momentum.
Integration with Linea zk-Rollups
In addition, the protocol recently received the green light from its community to launch on Linea (a ConsenSys-supported zk-rollup network). ZK-rollups are Layer-2 scaling solutions designed to enhance transaction throughput and make it cheaper.
Linea will improve the scalability of this protocol and lower transaction costs, which its users desire. It is also another factor that should attract many users to the platform.
These developments position the network for long-term growth within the DeFi space.
