The price of Aave (AAVE) has risen to its highest level since September 2021, after a 30% increase in the past 24 hours. The decentralized finance (DeFi) token has seen a surge in activity, with AAVE whale accumulation injecting new liquidity into the cryptocurrency.
Can AAVE maintain this growth momentum as the DeFi market regains its attraction? This on-chain analysis examines the possibility.
Aave stakeholders are bringing inactive tokens back to life
At the beginning of the year, AAVE traded below $100. However, with an increase of nearly 300%, the token surged to $350, marking its highest level in over three years. This impressive recovery has sparked interest in DeFi tokens, with Curve (CRV) significantly outperforming other altcoins recently.
According to Santiment, the mean dollar investment age (MDIA) is one reason for the increase in AAVE's price. MDIA measures the average age of all tokens on the blockchain, calculated by the average purchase price.
As MDIA rises, it indicates that most cryptocurrency holders are keeping their assets inactive in their wallets, which could hinder price growth. Conversely, a decrease in MDIA signals that previously stagnant tokens are returning to circulation, often indicating a rise in market activity and potential price increases.
Aave Mean Dollar Investment Age. Source: Santiment
As seen above, on-chain data shows that AAVE's MDIA has decreased significantly. If maintained, this could push the price of the altcoin above $400 if key stakeholders like cryptocurrency whales continue to shift from a prolonged dormant state to active trading.
Furthermore, looking at the AAVE address balances shows that cryptocurrency whales have been steadily purchasing the altcoin. As of December 1, the balances held in wallets of AAVE addresses owning between 1 million and $10 million were $5.14 million.
Today, this figure has increased to 5.40 million, indicating that cryptocurrency whales have purchased a total of 260,000 tokens in the past 11 days.
Aave cryptocurrency whale balances. Source: Santiment
With the current price, the token is valued at $92.30 million, indicating significant buying pressure. If this AAVE whale accumulates, the aforementioned viewpoint that AAVE's value could exceed $400 may come to fruition.
AAVE Price Prediction: This is the season to reach $420
On the daily chart, the price of AAVE is trading above the Ichimoku Cloud position. The Ichimoku Cloud is a versatile technical indicator that provides traders with a clear picture of support and resistance levels.
Typically, when the price of a cryptocurrency is above the cloud, it signals strong support for an upward trend. Conversely, if the cloud is above the price, it indicates resistance levels that may push the price lower.
Daily analysis of Aave. Source: TradingView
Since it is above the cloud, this means that the value of AAVE could continue to rise with potential targets around $420. However, if whale accumulation slows down, this price increase momentum may falter, potentially causing the DeFi token to drop to $260.