AAVE has jumped over 13% in the past 24 hours to trade at $231. Positive news around adoption of the platform by institutional players has contributed to this jump. From a technical perspective, if the 50 DMA at $241 can be broken, then there’s room to run to $300 before the coin meets tougher resistance of the longer-term downward channel.
What is AAVE?
AAVE is the native token of Aave Protocol, a decentralized lending system. In short, the DeFi crypto helps to facilitate transactions on the Ethereum blockchain. This includes assisting in lending and borrowing (including staking) different coins.
There are currently 17 coins supported, including some popular metaverse coins including MANA. The fact that users don’t need to include a traditional financial institution as part of the transaction is a major plus for AAVE.
The token has performed well when you look at the growth over the past two years. However, since the summer we’ve seen a downward trend. It’s been a tough spiral lower, as a declining price, utilisation and poor network growth compound on each other. This trend from August onwards is what will be ran into around the $300 level. So what’s the impetus that could cause a breakout?
Adoption sees a price spike
The main news being pointed to in the short run for the push higher is the adoption of Swiss bank SEBA onto the platform. SEBA want to give their clients access to the platform, paving the way for easier access to trading cryptos.
This is positive for AAVE, and also for the crypto market in general. Although SEBA aren’t one of the top tier banks, it’ll still see higher volume being put through the market. Further, it should also allow other banks to potentially follow suit. Once peers see the likes of SEBA complete the onboarding, there should be less concern to repeat the process again.
Could the AAVE price keep pushing?
From our point of view, if the 50 DMA gets broken over the next day or so, then we think this has a run at $300. This is down to two main points. Firstly, positive sentiment around the adoption from SEBA and what this could mean for more white labelling in 2022. Secondly, sentiment around the broader crypto market. We’re starting to see early signs of a recovery from the market sell-off. If this continues, then DeFi cryptos should see a good amount of benefit here.
In terms of risks, AAVE is no longer the top dog in the DeFi space. Terra’s LUNA is breaking all time highs this week, which we wrote about in more detail here. Sure, there’s room for multiple players in this space, but AAVE needs to make sure that it doesn’t get left behind next year in terms of network utilisation and development.
Overall, we’re bullish on AAVE in the short run and are thinking about adding it to our portfolio.