Key Insights
- •AAVE ranked among the top most promising cryptocurrencies with a market cap under $5 billion.
- •It is among the top gainers this week as demand for the cryptocurrency accelerates.
- •Whale activity around the AAVE coin is accelerating, but what impact will it have on price action?
Aave has just made it onto the top 10 list of the most promising projects with a market capitalization of less than $5 billion. But what does this mean for its future and that of its native token? Investors have been contemplating the best cryptocurrencies to hold, and AAVE might fit the bill. Its similarly named protocol has been ranked 4th in Ben GCrypto’s top 10 promising projects with a market cap below $5 billion.
Being listed among the most promising projects is one thing, but actually delivering on that promise is another. This warrants a glance at some of the reasons behind the confidence boost. According to DeFiLlama, Aave’s Total Value Locked (TVL) briefly dropped below $30 billion but has since bounced back above $34 billion. Token volume also made a strong comeback this week.
The token volume jumped from as low as $143.2 million on December 7th to $514 million at the time of observation. This confirmed robust activity this week, which also reflected its price action.
AAVE Price Extends Recovery Above $200, but Can it Go Higher?
The AAVE price has pulled off a healthy recovery in the last two weeks. The cryptocurrency surged as high as $206 on Tuesday, which was the highest price level it achieved since mid-November. This was also the first time in over three weeks that the price recovered above $200. For reference, the price surged by slightly over 18% from its local low in November. The cryptocurrency exchanged hands at $198 at press time.
AAVE's price action also pushed its Relative Strength Index (RSI) back above 50%, signaling that the bullish momentum might be strong enough to extend higher. The rally also put AAVE among the top-performing coins in the top 50 list by market cap. Interestingly, the supply and demand characteristics revealed some interesting findings that may offer insights into its next move.
Whales Have Been Moving Large Amounts
AAVE crypto registered about $10 million worth of spot outflows on Tuesday. This was the highest daily outflow recorded since October 10th, which could signal mounting sell pressure. The outflows may point to a bearish outcome ahead, and whale activity might be aligning for such an outcome.
Etherscan data revealed that whales recently transferred large amounts of AAVE from Coinbase cold wallets to newly created hot wallets.
The transfers were observed across multiple wallets on Coinbase. Moreover, approximately 42,000 AAVE coins were transferred in six transactions. These kinds of flows, especially from cold wallets to hot wallets, usually occur before the holders offload their coins onto exchanges. Consequently, this latest wave of sell pressure may indicate that the whales moving the coins might be preparing to sell.
However, that may not necessarily be the case. The whales might also be planning to put their AAVE holdings into DeFi use. It was also worth noting that the newly created hot wallets holding the AAVE coins did not offload them on exchanges yet.
Nevertheless, the crypto still holds on to healthy long-term potential. Aave remains one of the largest DeFi protocols, and it has so far stood the test of time.