AAVE: Can the buyback program reverse the coin’s 50% decline?

• AAVE pumped 15% after a bullish $1M weekly buyback proposal for 6 months. 
• Over 480K tokens were withdrawn from exchanges during the past three months. 

Aave [AAVE] was an outlier after it posted a 15% gain despite a broader market sell-off. The rally followed a bullish $1M weekly buyback proposal by the protocol’s team. 

Part of the proposal by Aave Chan Initiative (ACI) to revamp AAVE tokenomics, read, 

“The ACI considers this proposal can mandate the AFC to start an AAVE buyback and distribute program immediately at the pace of $1M/week for the first 6 months of the mandate.”

AD

The buyback program could be expanded, meaning increased demand for the coin and reduced supply, increasing the token’s value in the medium term. 

AAVE pumps 15%

At the time of writing, the coin closed the trading session with a 14% gain, in 24 hours. It extended the gains to 16%, after a nearly 2% increase during the early Asian trading session on the 5th of March. 

Since last December’s peak of $399, the coin declined over 50% to a low of $167 as Trump’s tariff wars exerted risk-off sentiment and market uncertainty.

While the positive news pushed the token back to its downtrend channel (white), the overall market structure was still bearish on the daily chart. 

Jumping above $227 and reclaiming the moving averages (mid-range of $250) as support would shift market leverage to the coin.

Nevertheless, as revealed by daily RSI toiling below the neutral level, the current lukewarm demand could cap the recent rally.  

That said, Marc Zeller, founder of Aave Chan Initiative, a service provider for the coin, termed the tokenomics update ‘most important’ for the protocol’s history.  

For his part, pseudonymous DeFi analyst, Ignas, referred to the move as a ‘big one’ referencing the protocol’s profits and capacity to sustain the buyback.  

“This is all possible because Aave’s treasury is booming; 115% increase in cash reserves, now sitting at $115M.”

AAVE accumulation increase 16%

The drop seen last December saw AAVE exchange reserves drop from 2.8M to $2.38M. That’s a whopping 480K AAVE tokens (over $96M) withdrawn from exchanges, or a 16% increase in holders’ accumulation during the dip.  

This could bode well for the DeFi token in the long run, if broader market sentiment improves and shrugs the tariff and inflation fears.