Despite recent positive advancements on the Aave platform, AAVE’s price experienced a slight 1.01% decline in the last 24 hours, deviating from the projected extension of its remarkable 30.47% weekly increase.
An analysis by Crypto Insights indicated that the altcoin might witness a surge in value soon, fueled by growing interest and enhanced liquidity. These elements could set the stage for a stronger performance in the upcoming trading sessions.
Impact of Reaching the Supply Cap on AAVE
Macro Mate from X (formerly Twitter) highlighted that the sUSDe stablecoin native to Aave has successfully reached its designated market supply cap of $850 million within a day.
Aave’s strategic decision to cap the stablecoin’s supply aims to manage risks effectively and ensure optimal asset utility. Nonetheless, the saturation of supply has led to a surge in borrowing costs for sUSDe due to high demand and limited availability.
This heightened activity signals increased user involvement in the Aave ecosystem. Typically, heightened user engagement correlates with a rise in token demand, potentially influencing its price trajectory positively.
Moreover, Crypto Insights pointed out the broader impact of these developments on various aspects of Aave’s ecosystem.
Record TVL Reached
Recent figures from DeFiLlama showcased a significant increase in AAVE’s Total Value Locked (TVL), surpassing $21.55 billion – a record high since the platform’s inception.
This surge highlights a growing level of investor activity within the ecosystem, including activities like asset locking and staking.
Given the coin’s central role in these activities, the uptick in user engagement on the platform is anticipated to impact its token’s price as well.
Crypto Insights predicts a rise in AAVE accumulation by investors in the near future, influencing its market performance.
Long Traders’ Interest in AAVE as Supply Tightens
Additionally, derivative traders have shown increased activity, with data from Coinglass’s funding rate indicating a gradual dominance of long positions on AAVE, with the funding rate hitting 0.0393%.
A positive funding rate implies that long traders are paying periodic fees to keep price balance between the altcoin’s Spot and Futures markets, reflecting their confidence in the asset’s potential price appreciation.
Furthermore, spot traders have exhibited a bullish sentiment, with a substantial outflow of AAVE from exchanges in the past 48 hours.
$3.372 million worth of AAVE has been transferred to private wallets for potential long-term holding, potentially leading to a supply constraint that could drive the asset’s price upward.
Continuation of this trend, paired with a decrease in available AAVE supply, is likely to bolster demand, further supporting the asset’s price movement.