AAVE price rises as smart money buys, exchange balances falls

AAVE price rebounded for the second consecutive day, erasing some losses from last week, as smart money investors bought in and exchange balances declined.

AAVE (AAVE), the largest lending protocol in the crypto industry, climbed to $341 on Monday, Dec. 23, marking a 25% increase from its lowest level last week. This recovery pushed the token’s market cap to over $5 billion.

The rally was not driven by any specific AAVE-related news but seemed tied to the broader rebound in DeFi tokens. Curve DAO Token (CRV) rose by 10%, while Raydium (RAY) was up by 5%. Other leading DeFi tokens, such as Chainlink and Lido DAO, also saw upward momentum.

AAVE’s performance was further supported by its strong fundamentals. It remains the second-largest player in the DeFi industry, managing over $19.6 billion in assets across chains like Ethereum, Polygon, and Arbitrum.

Exchange balances of AAVE tokens continued to decline, indicating that investors are holding rather than selling. The total tokens held on exchanges fell to 5.51 million, a 2.27% decrease from the previous week. A reduction in exchange balances is often viewed positively in the cryptocurrency market.

Nansen data also highlighted increased activity among smart money investors, with the number of smart money AAVE holders rising to nearly 50, up from fewer than 30 in June. Smart money balances now exceed 430,000 tokens, up from a year-to-date low of under 340,000. This accumulation is generally considered a bullish signal for a cryptocurrency.

Donald Trump’s World Liberty Financial has become a big buyer of the AAVE token. It owns over 6,000 coins valued at over $2 million, making it the fourth biggest part of its portfolio after Ethereum, Bitcoin, and USDC. The company also wants to build its DeFi network on top of AAVE’s platform.

AAVE price technicals point to more upside

Technicals suggest that the AAVE token has more upside to go in the next few days. The coin formed a hammer candlestick chart pattern on Dec. 20 as cryptocurrencies fell. A hammer forms during a downtrend and comprises a long lower shadow and a small body. 

Additionally, AAVE has found support at its 50-day moving average and is approaching the weak, stop, & reverse level of the Murrey Math Lines. This suggests that the token may continue rising, with the next significant resistance level to watch being $375.