Aave’s meteoric rally brought 50% to the coin’s value as of today which happened due to the market seeing an increase in appetite for the sector. In our latest altcoin news today, we are taking a closer look at the analysis.
The Defi market saw more traction from retail and institutional investors as they are getting more interested in Defi because of their actual cash flow. This makes DeFi protocols comparable to conventional companies that use traditional valuation models and the overall demand for DeFi increasing naturally. Parts of the reasons for the increase are oracles and lending. Lending platforms like Aave and Compound saw large increases in user activity and lending volume which caused the valuations of the coin to soar. Analysts from Santiment noted that the number of Aave whales increased dramatically in the past month which is only an indication of high-net-worth investors that are accumulating the coin:
“#DeFi is alive and well in #crypto, as $AAVE has skyrocketed to a +33% gain in the past day. #Aave whales, which we deem addresses holding 1,000 tokens or more (~$397k+ USD), have ballooned from 266 to 327 addresses this past month, fueling this rally.”
The continuous accumulation of aave whales and investors in the US is causing the price of Aave to increase. The market capitalization of Aave hovers above $5 billion but there was no other DEfi protocol that achieved a $5 billion market cap before. Aave’s market cap is quite high but the investors also anticipate that this coin will remain the dominant DeFi lending protocol. If this happens, the total value locked in DeFi could increase and DeFi will reach a valuation that allows it to become a top ten crypto.
Aave’s meteoric rally caught the eye of many investors, and the founder of Defiance Capital Arthur Cheong said that it is highly likely that Aave will become more valuable than any other European fintech startup by 2022. Investors that talked about Aave in the past say that they own the token and find it surprising that more people are not investing in it. Defi is no longer crypto native and slowly enters the mainstream, as well as investors, from the traditional finance sector. Analysts say that the traditional finance investors find Defi more appealing than BTC because they understand it better.
In the long-term, this could help buoy the overall growth in the market and the attractiveness of Defi assets as investments.
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