Stani Kulechov, Aave founder, recently announced the protocol was considering the burn of AAVE tokens that were acquired via its buyback program.
This potential development emerged as the Aave Protocol hit a cumulative revenue milestone of $3 billion. The existing model utilized the protocol revenue to purchase AAVE from the market.
The purchased tokens, however, would remain within the DAO ecosystem instead of permanently leaving circulation.
Whale demand joins the buyback story
As the discussions around the possible burn mechanism evolved, large market participants also expanded their AAVE exposure, accumulating massively.
The whale buying was of great significance as it introduced a direct market demand separate from the current buyback mechanism. Combined, these developments together placed whale accumulation and protocol mechanisms within the same supply story.
Ultimately, the whale accumulation implied large participants committing considerable capital to AAVE during the period.
Rising reserves complicate the supply picture
The exchange reserve data, on the other hand, introduced a clear counterweight to AAVE’s tightening supply outlook despite the whale accumulation.
According to CryptoQuant, Exchange Reserve USD expanded 6.26%, reaching roughly $440 million during the 24-hour period. This surge suggested more AAVE-denominated value moving into exchange reserves.
The exchange supply, therefore, expanded even as whales accumulated tokens outside the wider reserve trend, creating conflicting signals across the market structure.
Notably, AAVE’s demand was strengthened by the whale purchases, while higher reserves expanded the amount of capital positioned on exchanges.
Greater exchange availability could usher in additional selling pressure in case the token holders decide to distribute their tokens.
Can buyers overcome the $165.98 barrier?
On the 24-hour chart, AAVE rallied rapidly before facing resistance around the $165.98 region, where sellers interrupted the recent price rally. Subsequently, AAVE’s price then retraced lower, trading at $161.93 at reporting time.
The broader technical structure remained supportive as AAVE continued trading above its rising trendline. Furthermore, the $141.48 price level also remained a crucial support region below the price.
Moreover, the Directional Movement Index (DMI) added another favorable signal after the rejection, with the DMI printing +DI at 37.16 against -DI at 12.65.
The ADX indicator, meanwhile, reached 34.27, validating the narrative that the prevailing directional move had developed meaningful strength. Despite the rejection, buyers still retained an advantage.
AAVE could challenge the $180 area in case buyers manage to reclaim the resistance of $165.98. A continued rejection could trigger a deeper retracement towards the trendline support.
Final Summary
-
Aave’s proposed burns and $4.26 million whale accumulation strengthened its supply narrative.
-
AAVE could extend toward $180 if $165.98 turns into support after a confirmed breakout.
