The crypto market quickly turned bearish after yesterday’s barely bullish outlook, and top coins have slipped further away from their new found support. But interestingly, MarkerDao’s MKR seems unperturbed by the gloomy market sentiment MKR surged higher with massive gains, adding more than 17% to its value on the day.
MKR Price Outlook
Over the past day, the MRK token has witnessed several steep rises and falls. The digital asset reached a day high of $1,203 on July 21 at 02:30 UTC, up 20% from its July 20 opening price.
MKR had lost momentum shortly after its peak of $1,203 and fell to $1,134. However, it continued the fluctuations before regaining momentum for a more bullish rise. At the time of writing, Maker’s price is changing hands at $1,162, with the price up 17.63% in 24 hours.
Maker’s current price is up 26% from its value seven days ago and it could cross $1,200 if it sustains the current bullish rally. A close look at MKR’s sudden price increase suggests that the token may be riding other bullish waves.
Possible reasons behind Maker’s sudden price hike
Maker’s dramatic price increase may be due to recent developments in the MakerDAO ecosystem. On-chain sleuth, Lookonchain, reported some notable activities of top VC firms Andreessen Horowitz’s a16z and CMS Holdings, which are suspected to be responsible for the price increase.
According to the report, a16z recently deposited large amounts of Maker tokens on Coinbase. The venture capital firm deposited 12,864 MKR tokens worth approximately $12.6 million at the time.
The company also reportedly transferred a further MKR 6,900, worth $8 million at current exchange rates, to a new address, presumably with plans to deposit the money into an exchange. Currently, a16z holds approximately 12,396 MKR tokens worth ~$14.4 million.
Also, Lookonchain reported that CMS, a blockchain-focused private investment firm, has reduced its recently acquired MKR holdings. CMS Holdings deposited 525 MKR tokens worth $614,000 with Binance two hours before the sharp price hike.
CMS previously withdrew 1,325 Maker tokens worth $1.54 million from Binance and Bitget at an average price of $793. The investment firm now owns MKR 800, worth approximately $936,000.
Consequences of the activities of a16z and CMS Holding
The unprecedented change in token holdings of these top players in the market must have contributed significantly to the token’s price spike. The market reacted positively to the massive MKR sales, leading to increased trading volume and price increases.
The sharp spike in the MKR price can be interpreted as follows: the trading activity of institutional investors such as a16z and CMS Holdings is drawing more attention to Maker. The renewed interest could attract new buyers, putting more demand pressure on the token and pushing the price further up.
However, the reduction in the companies’ Maker holdings may raise questions about the long-term value of the token. This potentially bodes badly for the MKR as it could weigh on investor sentiment, leading to massive sell-offs that could push the price lower.
Featured image from Pixabay and chart from TradingView.com