AAVE Surges After Tokenomics Revamp

AAVE bounced back from its recent drop following Aave’s announcement to revamp tokenomics, attracting whale investors.

According to data from crypto.news, Aave (AAVE) surged nearly 27%, reaching an intraday high of $220 on March 5, bringing its market cap back to approximately $3.3 billion as of the last check in the Asian afternoon session.

Aave’s daily trading volume doubled to over $850 million, while open interest in its futures market surged 48% to over $257 million, indicating increased investor activity and demand among derivatives traders.

Despite AAVE’s recent rally, the altcoin remains 75% below its highest point this year, with a circulating supply of just over 15 million AAVE tokens.

Most of today’s gains came after Marc Zeller, founder of the Aave Chan Initiative, formally requested community support for a proposal to restructure Aave’s revenue allocation, terminate the LEND smart contract, and enhance liquidity management for users.

>The proposal reshapes revenue distribution and updates tokenomics for Aave’s future,” stated Aave in an X post.

Another key driver of AAVE’s gains is its recent integration with Sonic, a high-speed EVM blockchain formerly known as Fantom, which raised Sonic’s total value locked to $33 million within a day.

With this integration, Sonic joined Aave’s lending and borrowing network alongside Ethereum, Optimism, Arbitrum, and Polygon, expanding Aave’s ecosystem and driving fresh interest among investors.

Meanwhile, whale and Smart Money investors have turned their attention to AAVE. According to Lookonchain, a whale recently bought 20,000 AAVE tokens worth around $4.25 million. Another whale spent 1,928.86 WETH to purchase $3.95 million worth of AAVE, currently sitting on a floating profit of $406K. Additionally, on-chain data firm Alphanomics observed strong AAVE accumulation over the past two days, with $1.5 million accumulated by top holders and a $600K net inflow from Smart Money wallets.

According to Santiment data, social sentiment around AAVE has turned strongly positive, with the altcoin trending on Google.

AAVE Price Analysis

Technical indicators suggest AAVE could see further gains in the short term. The 4-hour AAVE/USDT price chart shows both the MACD and signal lines trending upward, indicating strong buying pressure which may sustain its bullish trend.

The Relative Strength Index (RSI) at 62 also suggests that the bullish trend is strengthening, likely leading to further gains in the coming days.

However, analysts note that for AAVE to confirm a strong uptrend, it must break out of the falling wedge pattern formed since January 21, with $230 as an immediate resistance level. A breakout could potentially push AAVE’s price close to $350, where it faced resistance at the end of January, also serving as an important psychological barrier.

Read more: 3 reasons why AAVE price may surge 200% this year

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