On October 1, the value of Maker (MKR) surpassed $1, 500 for the first time since May 2022. A close examination of on-chain data reveals two crucial indicators that may fuel the ongoing price increase.
MKR: The Native Token of MakerDAO
MKR is the native token of MakerDAO, a decentralized finance protocol that is responsible for issuance of DAI, a stablecoin with a market valuation of $5 billion. The recent surge in demand for the network has enabled MKR to regain the $1, 500 level, a milestone not achieved since the collapse of the algorithmic stablecoin TerraUST in May 2022.
Technical Modifications Drive Global Adoption
MKR was severely impacted by the market decline brought on by the TerraUST collapse in May 2022. DAI, at the time, was one of the most widely used stablecoins built on an algorithmic mechanism, similar to the failed UST stablecoin.
In response to this systemically negative event, the MakerDAO development team swiftly implemented adjustments to the DAI stablecoin’s collateralization mechanism. This resulted in a shift towards a hybrid mechanism, where DAI is now backed by a combination of mega-cap cryptocurrencies, collateralized stablecoins, and US Fed-issued debt instruments.
On-chain data demonstrates the effectiveness of these efforts, as the volume of MKR tokens used in daily transactions is now approaching levels last observed during the bull market of 2021.
Daily Active Addresses (DAA) Hit 2-Month High
On October 2, MKR Daily Active Addresses (DAA) reached a two-month high of 761. Notably, DAA has remained above 400 for a full week, a level last seen on September 26.
This surge in DAA, which measures the number of unique addresses interacting with the network, suggests a surge in organic growth within the MakerDAO ecosystem.
Historically, elevated DAA has preceded price increases for MKR. Given the current trend, it is possible that the network’s participants will drive MKR prices to new heights.
Network Participants Engage in Economically Viable Transactions
In addition to the increase in DAA, there has also been a corresponding rise in the number of daily transactions on the MakerDAO network in recent weeks. Following the US Fed’s announcement of a rate pause on September 20, the number of daily transactions has grown significantly, as investors flock to take advantage of DAI’s attractive 8% savings rate.
Daily Number of Transactions (DNT) Surges
On October 1, the Maker network processed 2, 240 confirmed transactions, a notable increase. Similar to DAA, DNT has consistently remained above 1, 200 since September 26.
The Transaction Count metric, which measures the number of confirmed transactions, provides an indication of the economic activity levels on a blockchain network.
The sustained rise in DNT suggests that users are engaging in economically viable transactions on the network. This, in turn, has contributed to the 15% price increase experienced by MKR between September 25 and October 3.
MKR Price Prediction: $2, 000 Within Reach
An analysis of key on-chain data points suggests that the sentiment surrounding the MakerDAO ecosystem is predominantly bullish. As long as the bulls maintain control, the price is expected to continue its upward trajectory towards $2, 000.
Global In/Out of Money Around Price (GIOM) Supports Bullish Outlook
The Global In/Out of Money Around Price (GIOM) metric, which visualizes the entry price distribution of current MakerDAO network participants, aligns with this bullish prediction.
The GIOM data indicates that if MKR price can break through the initial resistance at $1, 800, the bulls could drive a price rally above $2, 000.
Currently, 7, 930 addresses hold 74, 650 MKR tokens with an average purchase price of $1, 813. If these holders take early profits, a temporary pullback may occur.
However, if network activity remains strong, the price rally could ultimately reach a new 2023 high of $2, 500.
Bears and Bulls Wrestle for Control
The bears could potentially thwart this optimistic outlook if MKR’s price falls below $1, 200. However, it is worth noting that 9, 250 addresses have purchased 238, 700 MKR tokens at a maximum price of $1, 199.
If these holders remain committed and do not sell their tokens (HODL), MKR could avoid a significant bearish downturn. Nevertheless, if the bulls are unable to defend the $1, 200 support level, MKR’s price could decline further.
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