Aave, a leading crypto-lending protocol on the Ethereum network, has experienced significant growth in its total value locked (TVL), increasing by $2.26 billion since Monday. According to DeFiLlama data, this surge brought Aave’s TVL to $13.33 billion, which marks the highest level since May 2022.
The increase is largely attributed to the positive market sentiment surrounding the potential approval of spot Ethereum exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC).
Anticipation of Spot Ethereum ETFs Fuels Aave’s Renewed Growth
The AAVE token has also seen a notable increase, rising 13% over the past week. On Monday, its price jumped from $86.29 to $99.51 before slightly correcting to $96.19. This upward trend highlights the renewed investor confidence in Aave and the broader decentralized finance (DeFi) sector.
Aave’s TVL. Source: DeFiLlama
Aave is not the only DeFi protocol benefiting from the growing optimism around spot Ethereum ETFs. Uniswap, a prominent decentralized exchange (DEX) in the Ethereum ecosystem, has seen its TVL increase by $837 million in the same period. Uniswap’s native token, UNI, also surged from $7.65 on Monday to $9.69 today.
Other assets have also felt the ripple effects of this optimism. The Pepe (PEPE) meme coin reached an all-time high of $0.00001454, with a market capitalization of $5.81 billion after a 32.3% increase over the last seven days.
Similarly, Ethereum Classic (ETC), a fork of Ethereum, saw its price rise by 19.5%, now trading at $32.24. This reflects the widespread positive sentiment in the market.
A recent report from CryptoQuant offers deeper insights into the current market dynamics. It highlights several factors contributing to Ethereum’s price increase.
CryptoQuant analysts noted that traders aggressively open long positions in the perpetual futures market, leading to a short squeeze and a cascade of short liquidations. Additionally, significant spot buying from Ethereum permanent holders has put upward pressure on prices.
The report also stated a substantial amount of Ethereum is being moved to exchanges, signaling potential price volatility in the coming days. This activity is typically associated with high exchange flows, suggesting that the market could experience sharp movements. Despite the optimism, analysts at CryptoQuant advise caution.
“If the approval process gets delayed or the ETF applications are denied, ETH could experience a significant price correction,” they said.