- MakerDAO prices defied the crypto market downtrend as its MKR token jumped more than 81% in just six days.
- It's stablecoin DAI held its peg to the U.S. dollar during last weeks's market turmoil.
NEW DELHI (CoinChapter.com) — MakerDAO (MKR) prices skyrocketed in the wake of the collapse of Terra’s stablecoin UST, as its DAI stablecoin started attracting more attention.
MKR allows users to issue and manage MakerDAO’s DAI, the longest-running decentralized stablecoin. As a result, Terra’s loss has become DAI’s gain, with investors looking to DAI in UST’s wake. As a result, MKR prices jumped more than 81% between May 12’s low of $939.7 and May 17’s intraday high of $1,703.5.
The jump is impressive, considering the wider crypto market lost nearly $900 billion in the week starting May 9. MKR’s RSI jumped from near oversold levels on May 12, with the RSI trendline steadily moving upwards.
MakerDAO’s RSI is neutral at 55.6, indicating the altcoin’s price momentum currently favors the bulls. However, MKR prices are moving towards the upper band of the Bollinger bands, which would make MKR overbought.
Bollinger bands consist of a simple moving average (the middle band) and an upper and lower band. When an asset’s prices break above the upper band, it denotes an overbought condition, making an asset prime for a bearish trend reversal.
If MakerDAO becomes overbought, MKR prices would likely fall to immediate support near $1,530. A breach below immediate support could push MKR to support from its 20-day moving average (red wave, 20-day MA) near $1,390.
Finally, a sustained downtrend might see MKR prices test support near $1,260 before recovering.
MakerDAO’s MACD Indicates Strengthening Bullish Momentum
Meanwhile, the momentum oscillator MACD has been showing a strengthening upward momentum for the MakerDAO token.
Positive bars on the MACD histogram have been expanding, indicating that the MACD line (difference between 12-day and 26-day EMA) is moving away from the MACD signal line (9-day EMA of MACD).
If bulls continue pushing MKR prices, the MakerDAO token would likely move to challenge resistance from its 50-day MA (yellow wave) near $1,733.4. Furthermore, a move above immediate resistance might help MKR prices challenge resistance from its 100-day MA (purple wave) near $1,865.
Finally, a sustained uptrend might see MakerDAO prices rise to $2,080 before corrections pull back prices.
DAI’s Peg Remains Steadfast
Investor confidence in MakerDAO rose after its DAI stablecoin maintained its peg during last week’s market turmoil that saw several stablecoins lose their pegs. When the market volatility was at its peak, DAI prices swayed between a low of $0.9961 (May 11) to a high of $1.0046 (May 12).
Moreover, DAI prices held steady despite the stablecoin’s supply tanking by more than 2.2 billion DAI, which might have further boosted investor confidence.
At the time of writing, MKR was trading at $1,647, up 7.84% on the day.