MakerDAO Spikes 10% Overnight — What is Driving MKR Price Up?
With the excitement around SparkLend the price spiked by 10%. Further rise expected.
Key Takeaways
- MKR Token Surges by 10%.
- ETH Conference Highlights a New Lending Protocol Centered Around DAI.
- Chart Analysis Indicates Potential Upside to $1,800 or Even $2,800.
MakerDAO’s MRK token surged 10% overnight following a 27% decline. As it faces a key resistance, the question arises: rejection or breakthrough? The outcome hinges on robust fundamentals and MRK token demand, which currently appears strong.
In this analysis, we will present the price context, outline the potential price pathway, and delve into the factors driving the price increase. We’ll determine whether this rise has the potential to evolve into a sustainable uptrend.
MRK Price Analysis
MKR price has been on an uptrend since June 10, when it fell again to the support zone between $600 and $500. Since then, an increase of 135% occurred, bringing the token to its yearly high of $1,367 on August 2.
The price encountered a notable resistance zone, established since May 2022 and reaffirmed in both August and October of that year. Subsequently, it experienced a minor downtrend, briefly dipping below $1,000 on August 25, 2023.
Now, in late August, an upward trend started, with the price is currently retesting this zone once more and sitting at $1,150.
It’s important to highlight that this resistance and support zone has shaped a sideways range over the past 478 days. This can potentially signify an accumulation phase preceding an anticipated breakout and the initiation of MKR’s next bullish cycle.
A compelling probability emerges that this breakout momentum began on January 1, when the price dropped to $500 – its lowest level since December 2020.
If this indeed marks the outset of an uptrend that will culminate in a breakout, the descending movement from August 2 can be interpreted as a corrective phase, setting the stage for another higher high to materialize.
If a breakout happens, it may encounter a significant resistance at $1,800, which would be the target for the end of this larger uptrend that started in January this year.
Conversely, the breakout momentum could potentially be even more robust, considering the prolonged duration of the accumulation zone spanning over a year. If this scenario unfolds, the next plausible target could extend by an additional $1,000 to reach $2,800.
What is Driving The Rise?
The shed light of a new landing protocol exclusively for DAI (MakerDAO’s stablecoin) drove the rise. It’s called SparkLend and will be presented during EthconKorea event, which is starting on September 1.
What is SparkLend?
It’s designed to cater to the unique requirements of DAI users, setting itself apart through its foundation in the DAI-focused money market protocol, driven by Maker. The protocol holds the potential to seamlessly combine Maker’s unmatched liquidity with an optimized DeFi user experience.
SparkLend assures consistent rates whether one’s borrowing for the first time or the hundredth. Current data reveals an impressive borrowing sum of $200 million DAI via Spark, all at a steady 5% interest rate, showcasing its dedication to maintaining predictability.
SparkLend goes beyond borrowing, introducing the potential of cross-collateralization. Users can deposit sought-after assets such as wstETH, ETH, rETH, and GNO, gaining the capacity to directly borrow DAI from Maker at consistent rates. This demonstrates the benefits and potential of cross-collateral positions.
As of the current moment, the APY on WETH in the Spark ETH market stands at 122%.
It’s no surprise that the MakerDAO community holds considerable excitement for the SparkLend protocol. The increased demand for DAI has consequently impacted the platform’s governance token, MRK.
This optimistic sentiment is evident on the price chart and, as we delve into the price analysis, it could potentially drive a breakout from the accumulation zone and foster a lasting uptrend.
Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
