MKR Price Prediction: Buying Pressure Must Be Sustained

MKR, the governance token of MakerDAO, has witnessed a 10% price uptick over the past 24 hours. It’s currently trading at a weekly high of $1,224.

MakerDAO’s governance token, MKR, has recorded a price uptick of 10% in the past 24 hours. It’s currently trading at a weekly high of $1,224. This price movement comes as the altcoin continues to trend lower on the price charts.

The recent double-digit rally has led many futures traders to take long positions, expecting a continued price rise. However, this surge may fall short of countering the looming risk of liquidations. Here’s why.

Maker Records Gains, but Open Interest Drops

After forming a death cross pattern in July, MKR has maintained a downtrend. This pattern occurs when an asset’s short-term moving average (50-day small moving average) crosses below a long-term moving average (200-day small moving average).

This bearish technical formation signals a shift in market sentiment from bullish to bearish and highlights weakening momentum in the asset’s price. Traders usually interpret this crossover as a sign of potential price decline.

This bearish technical formation signaled a shift in market sentiment. As a result, MKR holders have increased their selling activity. The altcoin’s price has declined 22% in the past month, hitting a 13-month low. Key technical indicators suggest this downtrend may persist.

For instance, MKR’s Bull Bear Power has remained sharply negative in recent weeks. This indicator measures market momentum by comparing the strength of buyers and sellers. A predominantly negative reading reflects weak buyer activity.

It suggests that buyers cannot push prices above recent highs, indicating a lack of demand or confidence in the market. Long Traders Face Liquidation Risks

Another sign of this lack of confidence is MKR’s plummeting Open Interest. At the time of writing, the token’s open interest stands at $81 million, having declined by 12% since the beginning of the month.

Open Interest reflects the total number of outstanding derivative contracts, such as options or futures, that have not been settled or closed. When it drops, it indicates a decline in market participation or a reduced number of active positions among traders. This suggests that traders are closing their positions to realize profits or cut losses.

Despite the nonstop fall in MKR’s price over the past few months, many of its futures traders have continued to demand long positions. This is evidenced by its significantly positive funding rates, which stand at 0.014% as of this writing.

According to Coinglass, the MKR long/short ratio has reached a monthly high, with almost 50% of the volume now dominated by long positions. Over the past 24 hours, MKR’s long volume has totaled $42.07 billion.

While this setup is usually viewed as a bullish signal, the large imbalance between long and short positions exposes the long positions to substantial risk. Prevailing bearish sentiment around MKR heightens this vulnerability; if the trend reverses, these long positions could be at risk of liquidation.

MKR Price Prediction: Buying Pressure Must Be Sustained

Now trading at $1,224, up from its $1,032 support level, MKR’s recent price uptick of 10% has pushed the token toward the next key resistance at $1,683, according to Fibonacci Retracement levels.

To successfully break above this level, MKR’s price needs a significant and sustained surge in buying pressure. Achieving this will set the altcoin on a trajectory to surpass $2,000 for the first time since August.

Conversely, if bearish sentiment resurfaces, MKR’s price could shed its recent gains and decline toward the support level at $1,032, putting the long postions at risk of liquidations.

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