AAVE declined for the second consecutive week, mirroring the performance of most altcoins as tariff risks remained a concern.
AAVE (AAVE) token fell to a low of $196.4, its lowest level since November 25, and is currently 50% below its highest level this year.
The token has a few catalysts that may push it to its all-time high of $666, up by 170% from the current level.
First, there are signs of increased accumulation by investors. Coinglass data shows that AAVE’s balances on exchanges have crashed to the lowest level in years. These balances moved to 2.2 million on Friday, down from 2.67 million in December.
A significant drop in exchange balances suggests that investors are holding their tokens rather than selling, which is a positive indicator. In contrast, rising balances often indicate selling pressure, as investors move their holdings from self-custody to exchanges to sell.
Second, AAVE is still the biggest lending and borrowing protocol in the crypto industry, with about $20 billion in assets. It is also one of the most profitable as the annualized fees has jumped to over $721 million. TokenTerminal data shows that it has made over $103 million in fees this year.
Notably, AAVE successfully handled over $201 million in liquidations on Monday as cryptocurrency prices dropped. Despite the substantial liquidations, no bad debt was accrued to AAVE, and total bad debt fell by 2.7%.
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Author: Crispus Nyaga
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