The price of AAVE has fallen more than 15% over the past four days, but investors have seized the dip as an opportunity. A renewed wave of interest in tokenized yield markets, especially through collaborations with Pendle and Ethena, is helping revitalize demand for the Aave protocol – potentially setting the stage for a strong price rebound.
Sharp Price Dip Followed by a Swift Reaction
AAVE dropped from a local high of $283 (on May 27) to a daily low of $240, but the market quickly responded – pushing the price back above $254, and it’s currently hovering around $251. All signs suggest that a bullish recovery may be underway.
Aave Activity Surges as Pendle PT Tokens Gain Traction
Aave’s recent momentum is closely tied to the addition of new collateral types enabling trading of tokenized yields (PT – Principal Tokens). On May 27, Aave added support for eUSDe, PT-USDe (maturing in July), and PT-eUSDe (maturing in August). This expanded the platform’s total market size to around $700 million.
The next day, May 28, Pendle launched trading for these tokens with initial caps:
🔹 $100 million for PT-eUSDe
🔹 $40 million for PT-USDe
Both caps were hit within hours. On May 29, the caps were doubled to $200M and $80M respectively – and again, demand was strong enough to fill them quickly. This highlights the booming appetite for yield-bearing instruments on Aave.
What Are PT Tokens?
PT tokens represent fixed yield rights to underlying assets locked in Pendle. They split the principal and yield, allowing users to trade and monetize future returns. While some PT tokens from Ethena were added earlier, this new expansion on May 27 significantly accelerates Aave's position in the tokenized yield space.
Growing Protocol, Growing Trust
Although PT tokens don’t directly affect AAVE’s market price, they drive adoption and use of the Aave platform, which is crucial in the long term. More assets being deposited means a higher TVL (Total Value Locked) – which, as of May 20, accounted for 20% of all TVL in the DeFi sector.
As adoption grows, AAVE gains utility through its governance role, and broader network trust often boosts the token’s long-term value.
What’s Next for AAVE Price?
From its current level of $251, AAVE is eyeing a move toward $283, a potential 12% rally. If it breaks this resistance, the next key target is the $300 mark – a psychological level that also acted as support during the December rally.
If bullish momentum continues, AAVE could see a near 20% gain in the short term.
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