Maker (MKR) price could soon plummet as rising wedge forms
The Maker price has been in a consolidation mode in the past few days as investors assess the strength of the DeFi industry and its Dai stablecoin. MKR is trading at $1,544, which is in the same range it has been recently. This price has risen by more than 64% from its lowest level last week. It now has moved to over $1.4 billion, making it the 51st biggest coin in the world.
MKR rally fizzles
Maker is the biggest DeFi platform in the world with more than $10.5 billion locked in its ecosystem. It is a decentralized autonomous organization (DAO) that allows people to generate a stablecoin known as Dai by leveraging collateral assets provided by Maker Governance.
Dai is a stablecoin that is relatively different than Tether and USD Coin. Unlike these two, it is soft-pegged to the US dollar. However, it is decentralized in nature and its collateral assets are deposited in Maker vaults.
The Maker price rose sharply in the past few days as investors embraced Dai after the collapse of Terra LUNA, Terra USD, and affiliated DeFi networks like Anchor Protocol and Astroport. In the past few days, the total market cap of Dai has jumped to more than $6 billion, making it the 17th biggest coin in the world. It has become the third-biggest stablecoin in the world after Tether and USD Coin.
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Still, a closer look at its ecosystem shows that people have pulled out their cash from the network after the collapse of Terra. Its total value locked (TVL) in the network has declined to about $10.5 billion, which is the lowest it has been since July last year. At its peak, it had a TVL of over $20 billion.
Maker price prediction
The four-hour chart shows that the MKR price has moved sideways in the past few days. The coin moved slightly above the 25-day moving average while the Relative Strength Index and the Stochastic Oscillator have tilted downwards.
However, a closer look shows that the coin has formed a rising wedge pattern, which is usually a bearish sign. Therefore, the outlook of Maker is bearish, with the next key support level to watch being at $1300. A move above the resistance level at $1,650 will invalidate the bearish view.