A crypto analyst closely followed by the crypto community says that decentralized borrowing and lending protocol Aave is poised to experience a massive upswing once the bear market ends.
In a new video, Coin Bureau channel’s alias Guy gives his 2.08 million subscribers during the current market downturn. Aave’s (AAVE) it says it is below the value that should be priced.
“According to Etherscan, Aave’s ecosystem reserve currently has only 1.7 million AAVEs. On the demand side of this economic equation, Etherscan AAVE token It suggests that the number of holders continues to increase, and I suspect this is because the AAVE token sticker price has dropped significantly, making it more attractive to investors who don’t care about the market cap issue.
In this regard, we noticed comments claiming that Aave was not undervalued during the last video because the stock market price of AAVE was high, although it was probably undervalued because the token’s market cap was four times smaller than it should have been compared to the total value locked in the Aave protocol. I couldn’t help it. Never forget that it is the market value that matters, not the price tag.”
Guy believes the new Aave stablecoin, GHO, will also increase demand for the popular altcoin.
“What matters is the relative scarcity of demand drivers for the AAVE token. The availability of the AAVE coin is currently limited to governance and staking, which although with slightly higher risks, undoubtedly offers an attractive reward over the alternatives.
But the glimmer of hope here is that most of Aave’s supply is in circulation, meaning there isn’t much selling pressure, and that seems to be the logic behind allocating interest rates from the GHO stable coin to the Aave treasury. This reduces the selling pressure for the AAVE token and ensures the longevity of the protocol.
The launch of the GHO stablecoin is also expected to increase demand for AAVE as it will make it possible for Aave stakers to print GHO at near zero interest rates. It should be noted that an increase in staked Aave, be able to dilute the overall staking rewards i.e. The second is that Aave could weaken the demand driver.”
The analyst says several factors contributed to Aave’s more than 70 percent drop in value in January, including energy and supply chain disruptions, an increase in interest rates and an increase in circulating supply, leading to potential selling pressure of $40 million.
Guy says demand drivers will have minimal impact on Aave’s price due to the current drop, but he believes the situation will change once the bear market ends.
“The sad truth is that future demand improvements by Aave will not change the fact that we are currently in a crypto bear market, but will help the Aave token rise to astronomical heights when the next bull market comes, especially if the GHO stableecoin is adopted in earnest. ”
Currently trading in a positive trend, the Aave token is trading at $91.12, up nearly 20 percent at the time of writing.
You can check the price movements here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, KoinFinans and the author of this content cannot be held responsible for personal investment decisions.