MKR, the governance token of major stablecoin lender MakerDAO, has seen a sharp drop in recent weeks. It is currently trading at $1,206, marking an 11% price drop over the past week.
The cryptocurrency is now trading at its lowest price since September 2023. So, if the downward trend continues, the price of MKR could fall below $1K for the first time since 2023. This analysis explains why.
Maker holders may be in trouble
Since August, MKR has been trading below its Ichimoku Cloud. In short, this indicator tracks the momentum of market trends and identifies potential support/resistance levels.
Read more: MakerDAO (DAI) – Beginner’s Guide
MKR Ichimoku Cloud. Source: TradingView
When the price of an asset falls below it, it signals a change from an uptrend to a downtrend. Thus, if the price remains consistently below this cloud, it strengthens the downtrend.
However, this new demand has been lacking in the MKR market for several weeks now, as evidenced by its falling Chaikin Money Flow (CMF). In short, this indicator measures how money flows in and out of an asset. MKR’s CFM is currently at -0.40, the lowest it has been since August 2022.
MKR Chaikin Money Flow. Source: TradingView
The alignment between the price drop and the CMF reduction reinforces the bearish outlook for the market. This signals that capital is leaving the asset, making a recovery less likely without a change in market sentiment.
MKR Forecast
In fact, MKR is trading at $1,206. Based on the readings from the cryptocurrency’s Fibonacci Retracement tool, as selling pressure increases, MKR’s price could drop to $511, marking its lowest level since May 2023.
Read more: 10 DeFi tokens to diversify your portfolio
MKR Price Analysis. Source: TradingView
However, this bearish projection could be invalidated if the market sentiment shifts from bearish to bullish. In this case, the MKR price may attempt to break through the resistance levels formed by its Ichimoku Cloud at $1,954 and $2,632. A successful breakout could set the stage for a potential rally towards a six-month high of $4,118.
The post MKR Price Plunges: Downtrend Threatens $1K Support appeared first on BeInCrypto.
