AAVE Surpasses $360: Bullish Momentum Fueled by Influx of Dormant Tokens

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

This is the first time since 2021 that the asset has recorded a crucial milestone in a rally fueled by a huge wave of coins returning to circulation.

AAVE Major Stakeholders Circulate Dormant Coins

As Santiment highlights in his latest analysisThis increase is accompanied by a significant drop in the “Average Dollar Investment Age,” a key indicator that suggests that key stakeholders are putting previously dormant tokens back into circulation. This influx of active coins plays an important role in fueling AAVE’s bullish momentum.

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 large holders continue to circulate older tokens. If the whales decide to stop their activity, a setback could occur. In such a scenario, AAVE’s bull phase risks cooling off.

Adding another layer of knowledge, Spot On Chain reported that Blockchain Capital, one of the prominent early investors in AAVE, deposited a significant amount of the token (16,964) into FalconX after two years of inactivity. This stash is worth around $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 owns a considerable amount: 216,292 AAVE, valued at almost $79 million.

This large deposit, coming after a prolonged period of inactivity, could indicate that whales are recommitting to AAVE, aligning with Santiment’s observation that the movement of older tokens is essential to sustaining the asset’s uptrend.

Catalysts behind AAVE’s growth

Several key developments are contributing to the recent AAVE price surge. First, decentralized exchange (DEX) balancer launched its V3 update that introduces improved liquidity optimization, increased trading volume, and advanced developer tools.

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

Additionally, the upcoming launch of Aave en Linea, a zk-rollup network backed by Consensys, is another key factor. With community approvalThe platform will take advantage of Linea’s scalability and reduced 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 purchased AAVE tokens at an average price of $297.8, indicating strong institutional confidence in AAVE’s prospects.