Aave Rallies 9% Amid Sonic Blockchain Launch and Whale Accumulation

Aave (AAVE) rebounded to an intraday high of $274.91 on February 5, gaining 9.6% over the past 24 hours, driven by community hype around its potential launch on Sonic blockchain and an uptick in whale accumulation.

Key Drivers Behind AAVE’s Rally

There are three main reasons behind AAVE’s recent surge. Firstly, the Aave community has completed an Aave Request for Comment proposal to bring AAVE V3 to Sonic, an EVM-compatible blockchain network. With nearly 100% approval, V3 may soon go live on Sonic following a final vote, enhancing Aave’s adoption and revenue potential.

Secondly, Aave successfully navigated the recent flash crash on February 3, processing $210 million in liquidations and reducing its existing bad debt by 2.7%. This demonstration of resilience and financial stability has likely renewed investor interest, driving demand for AAVE.

Thirdly, whale activity around AAVE has increased over the past week, with a smart whale purchasing 102,259 AAVE tokens worth approximately $27.5 million. Additionally, whales picked up 62 million AAVE between January 29 and February 1, and World Liberty Financial Initiative has been actively investing in AAVE in recent months.

AAVE Price Action and Technical Indicators

On the 4-hour USDT chart, the MACD lines have pointed upwards, indicating a strong bullish trend. The Chaikin Money Flow index also shows a positive reading, suggesting a fresh supply of money or capital supporting the current rally. Further, the Relative Strength Index recently bounced from an oversold level and has been moving upwards.

Given these technical indicators, AAVE could continue its rally to retest $375, its highest point in January, which is 38% above the current price. A short squeeze in its futures market is also possible, as the open interest has risen by 10% to $240 million, while its weighted funding rate has turned negative at -0.0124%.

What’s Next for AAVE?

If AAVE continues to rise higher owing to buying pressure following the recent whale accumulation, this could lead to short holders facing liquidation, forcing them to buy back their positions at higher prices. This, in turn, could trigger a cascade of liquidations, further driving up the asset’s value.

Aave’s potential launch on Sonic blockchain, whale accumulation, and technical indicators suggest a bullish trend for AAVE. However, investors should always exercise caution and do their own research before making investment decisions.

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