AAVE Price Prediction as Whales Buy and Exchange Reserves Dive

AAVE price continued its comeback. The token reached its highest level in a month as demand from whales and retail investors rose.

The token soared to a high of $205, up by ~40% from its lowest level in November. This article explores why the AAVE coin price may keep rising in the near term.

AAVE Price Rises as Whales Bought and Supply in Exchanges Dropped

AAVE price has been rising as third-party data points to more demand. Data compiled by Nansen shows that whales and smart money investors have boosted their buyout in the past few weeks.

That is a sign that these traders are buying the dip after it plunged from $380 in August to $145 in November. The exchange supply dropped to 4.39 million today, down by 23% in the last 30 days. This supply has continually dropped after peaking at 6.26 million in June this year.

A 30% drop in supply is a notable thing as it means that investors are moving their tokens from exchanges to self-custody wallets. This signals that they expect the price to rebound over time.

The decline also happened as whales and smart money investors continued buying the token. These investors now hold 163,093 tokens, currently worth over $33 million.

Smart money investors with a strong success record have now accumulated over 589k tokens. That’s a 105% increase in just the last 180 days.

This is important as these investors often accumulate when the token is low and sell when it is up. Indeed, smart money holdings dropped in early November before the token dropped.

Aave Coin Has Encouraging Futures Metrics

More third-party data is sending bullish signs for the AAVE token. For example, the weighted funding rate has remained above the zero line in the past few weeks. It’s a sign that traders in the futures market expect the price to keep rising in the near term.

Futures open interest has fallen sharply from its August peak of $805 million. It now sits at just $228 million. This is one of the main reasons why the Aave price has moved into a technical bear market.

On the positive side, the decline in the futures open interest has stopped falling and has moved sideways. As such, there is a likelihood that the figure will start rising, which will boost its performance.

Aave’s Network is Gaining Momentum Despite the Crypto Weakness

Meanwhile, Aave has some of the best fundamentals in the crypto industry, where it is the biggest player in decentralized finance (DeFi).

Data compiled by DeFi Llama shows that the total value locked (TVL) has dropped to $33.8 billion from the year-to-date high of $45 billion.

This decline, while steep, is mostly because of the falling Ethereum price, which has moved into a bear market this year.

However, the TVL is still near its all-time high based on ETH terms. It has over 10.43 million ETH in its network, a few points below the all-time high of 11.2 million.

Meanwhile, Aave has continued to generate substantial revenue and fees. Its fees stood at over $86 million in November, while its fees were $10.7 million.

As a result, the network has made cumulative fees of $1.83 billion and revenues of $276 million. This makes it one of the most profitable players in the decentralized finance industry.

The network growth may continue after the developers announced a new partnership with Tangem. This will enable yield on their idle USDT, USDC, and DAI stablecoins.

AAVE Price Technical Analysis

The daily timeframe chart shows that the AAVE price has rebounded in the past few days. It rose from a low of $147 to slightly above $200. It is now attempting to move above the Supertrend indicator, a move that will confirm a strong bullish breakout.

The token has also formed an inverse head-and-shoulders pattern, which is a common bullish reversal sign. Also, the Relative Strength Index and the MACD indicators have continued pointing upwards. This means that it may continue to rise to the psychological level at $250.

Aave price has bounced back in the past few days as investors continue buying the dip and the supply in exchanges dived. It has strong technicals, pointing to a prolonged comeback.