- Maker (MKR) has seen a significant surge in value and trading volume.
- Founder of MakerDAO, Rune Christensen, showed confidence in MKR by investing in it.
- MKR’s upward momentum may be impeded due to declining trading volume.
The recent performance of Maker (MKR) has proven to be highly profitable for traders who initiated long positions. In the initial hours of July 18, MKR was being traded at approximately $903. However, as per CoinMarketCap, a significant surge of 7.53% in value and a substantial increase in trading volume propelled the token to reach $978.33.
The ascent of MKR may not come as a shock to certain individuals within the crypto industry. This is primarily because Rune Christensen, the founder of MakerDAO, made a strategic move on July 16 by selling a portion of the protocol’s stablecoin DAI to acquire MKR. Shortly after that, Christensen further demonstrated his confidence in MKR by selling 13.57 million Lido DAO Token (LDO) units and utilizing the proceeds to invest in MKR.
Typically, such substantial accumulation is often accompanied by a surge in value. Therefore, buying pressure was only anticipated to propel MKR on an upward trajectory.
MKR Risks Retracement
Upon analyzing the 4-hour MKR/USD chart, it becomes evident that MKR has experienced notable buying pressure on multiple occasions recently. Notably, on July 15, a substantial surge in demand was observed at $857.78. This surge subsequently propelled MKR’s value to an impressive $993.59 the following day.
However, the rally concluded with a significant wave of profit-taking, resulting in MKR nearly relinquishing its grip on the crucial $900 level. Considering the fluctuations observed on July 15 and 16, there is a potential vulnerability for MKR to experience a retracement once again.
One factor contributing to this phenomenon is the Relative Strength Index (RSI) and trading volume. Currently, the RSI stands at 62.02, indicating a confirmation of buyer dominance in the market. However, it is worth noting that the remarkable buying momentum is occurring alongside a decline in trading volume.
Hence, the bullish divergence may lose its potency, potentially leading to a decline in the RSI and subsequent oscillation around the 50% center-line. As a result, MKR’s upward momentum could be impeded, causing the price to return to $950.
Lack of directional support
Furthermore, the Directional Movement Index (DMI) converged with the prevailing buying pressure. Currently, the +DMI (blue) stood at 31.79, indicating a substantial influx of buy orders.
In the crypto industry, the sell side, represented by the -DMI (red), stood at 17.10, indicating a bearish trend. However, despite the significant difference between these indicators, it is unlikely that MKR will reach the $1000 mark shortly, primarily due to the current status of the Average Directional Index (ADX). The ADX (yellow) was recorded at 17.55 when writing, suggesting a lack of strong trend momentum.
In the crypto industry, it is customary for an asset to exhibit an ADX value of 25 or higher to validate its directional strength. However, given the absence of ADX support in the case of MKR, the likelihood of witnessing another substantial price surge is rather slim.
Disclaimer: The insights, perspectives, and data presented in this price analysis are published in good faith. Readers must conduct their own research due diligence. Any decision made by the reader is solely their responsibility, and Crypto Outlooks shall not be held responsible for any consequential or incidental harm or loss.
