Aave has started buying back AAVE from the market on a weekly basis, reducing supply.
Investors in the market have followed suit, accumulating AAVE as they consider the development positive.
Aave [AAVE] registered a 1.11% uptick over the past 24 hours, trailing slightly behind its 2.91% gain for the week.
This 24-hour growth follows Aave’s recent implementation of a token buyback system, which could drive the asset into a rally.
Market participants are moving in response to this development as they acquire the token. However, will this be sufficient to overturn its 20% drawdown from the past month?
What does the buyback mean for AAVE?
The Aave team has set aside an annual budget of $50 million to buy back AAVE from the market, with a weekly spend of $1 million to achieve this goal.
This new development reflects a change in the fee structure and is expected to act as a catalyst for price growth.
Between the 9th of April and press time, 10,014 AAVE worth $1.39 million had been purchased from the market under this initiative.
Source: TokenLogic
Moreover, the buyback pool may expand further, depending on protocol revenue during this cycle. This approach, by design, achieves two things — instills investor confidence and potentially triggers a supply squeeze.
Having said that, the market didn’t wait long to respond. Accumulation picked up, hinting at expectations of a rally.
Accumulation has surged in the market
There’s been a growing accumulation in the market, likely to lead to a price breakout.
Over the past week, $13.98 million worth of AAVE changed hands — $4.30 million of that in the last 24 hours alone.
This accumulation is noteworthy, as these AAVE tokens purchased from the spot market are being held for long-term commitment and moved into private wallets.
Source: TradingView
The 4-hour chart provides better insight, confirming that investors are accumulating the asset as it trades within a symmetrical triangle pattern made of converging support and resistance levels, with price oscillating within it.
Finally, a breach of the upper resistance line would imply the start of a price rally. If a breakout occurs, the price target lies between $170 and $187.
Also, stronger market momentum could push the asset back to the $200 region.
Liquidity growth remains high
The market reaction isn’t limited to accumulation and storage in private wallets. A cohort of investors has moved their AAVE into the protocol, becoming liquidity providers.
Source: DeFiLlama
This influx has propelled the Total Value Locked (TVL) to $18.029 billion — its highest since early April. A growing TVL often implies rising confidence and deeper market roots — both of which support price continuation.
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