Decentralized finance (DeFi) token AAVE has emerged as the market’s top gainer in the past 24 hours, soaring 20%. The surge follows the release of a new governance proposal to restructure the protocol’s tokenomics.
The positive community reaction to this move has spurred a rise in demand for AAVE over the past day. If the trend continues, the altcoin may extend its gains in the short term.
Aave’s Aavenomics Proposal Fuels 20% Surge—But Will It Last?
On March 4, Aave Chan Initiative (ACI) founder Marc Zeller introduced a proposal that details the first phase of implementing the Aavenomics update.
The proposal, which follows a TEMP CHECK approved in August 2024, seeks to revise AAVE tokenomics, redistribute protocol excess revenue, deprecate the legacy LEND token, and launch Anti-GHO to improve incentives for GHO stablecoin holders.
The new proposal has received positive feedback from the Aave DAO members, prompting the market to pay attention to the protocol’s AAVE token. As a result, its price soared by 20% over the past 24 hours, making it the market’s top gainer.
Notably, AAVE’s double-digit rally has driven its long-term holders to move their tokens, reflected by the spike in its age-consumed metric, which measures the movement of long-held coins. According to Santiment, the metric totaled 11.66 million on Tuesday.
This rise is noteworthy because long-term holders are not in the habit of moving their coins around. Therefore, when they do, especially during periods of price uptick like this, it hints at a shift in market trends. Significant spikes in the age-consumed metric during a rally could suggest that long-term holders are offloading, possibly increasing the selling pressure on the asset.
Moreover, the uptick in AAVE’s exchange inflow on Tuesday confirms this selling activity. Per Santiment, this metric, which measures the amount of an asset sent to exchanges, climbed by 114% during the review period.
A spike in an asset’s exchange inflow means a large amount of the asset is being deposited into exchanges, often signaling high selling activity. This may put downward pressure on AAVE’s price, causing it to shed its recent gains.
AAVE Holds Above Key Support at $199.80 – Will Bulls Prevail?
AAVE trades at $211.45 at press time, slightly above the support formed at $199.80. If selloffs continue, the bulls may struggle to defend this support level.
A breach of this level could cause the price to decline toward $145.42, a low it last reached in November 2024.
On the other hand, if the current uptrend persists and new demand for AAVE strengthens, it could drive its price up to $238.
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