Aave (Aave) Price Surges 15% on Bullish Buyback Program

Aave's (AAVE) recent 15% price surge has fueled optimism within the DeFi community, as the protocol rolls out a bullish buyback program

Aave (AAVE) has seen its price surge by 15% recently, which is a ray of hope in the broader cryptocurrency market that has seen most assets experience significant losses. In contrast, AAVE has seen an impressive 15% gain in the past week alone.

AAVE’s rally could be attributed to the initiative of the Aave Chan Initiative (ACI) to launch a $1M weekly buyback plan for the next six months. This proposal, if approved by Aave’s governance, will reshape the tokenomics of AAVE.

Every week, the initiative will buy $1M worth of AAVE and distribute it across the network. The buyback program will decrease the overall supply of AAVE, potentially boosting its value in the medium term.

AAVE’s current price has faced significant challenges since its peak of $399 in December 2024. The token has seen a 50% drop to lows of $167. This decline came amid global economic uncertainty, particularly related to tariff wars and risk-off sentiment. However, the recent news has brought some optimism to investors.

Aave’s treasury has also been experiencing a significant increase, with cash reserves rising by 115% to $115 million. This substantial growth in reserves gives the protocol the financial capability to sustain the buyback program over time.

“[This is] the most important update to the protocol’s tokenomics in its history,” said Marc Zeller, founder of the Aave Chan Initiative (ACI) in a statement.

“[Aave’s] treasury is now very healthy and allows the protocol to run such an ambitious plan,” remarked pseudonymous DeFi analyst, Ignas.

The buyback program is seen as a direct response to the token’s declining value and a proactive effort to restore confidence in AAVE’s long-term potential.

Increased Accumulation and Shrinking Exchange Reserves

In addition to the buyback program, there has been an increase in AAVE accumulation. During the price drop in December, the number of AAVE tokens held on exchanges decreased significantly.

Over the past three months, around 480,000 tokens (worth approximately $96 million) were withdrawn from exchanges. This represents a 16% increase in the number of tokens being held by long-term investors, which suggests that there is growing confidence in AAVE’s future prospects despite the short-term volatility.

AAVE’s exchange reserves have decreased from 2.8 million to 2.38 million tokens during this period, which could be seen as a sign of belief in AAVE’s future, especially with the introduction of the buyback program.

Challenges Ahead: Bearish Market Conditions

While the buyback initiative has generated positive sentiment, AAVE is not entirely out of the woods. The broader market remains bearish, and the current market structure is still tilted toward the downside.

AAVE’s price is still trading below key support levels, and the Relative Strength Index (RSI) remains below the neutral level, suggesting that demand for the token may be lukewarm in the short term.

For AAVE to see a sustained reversal, it would need to reclaim important levels, such as the $227 mark, and establish stronger support above the $250 range. If the buyback program proves successful in attracting more demand and reducing supply, AAVE could set the stage for a more substantial long-term recovery.