MKR has seen a relatively stable period of trading as it has remained trapped within a wide range between $800 and $300. The cryptocurrency is presently around 25% up from the 2019 opening price as it trades at around $580 (as of early November 2019) and looks to be trending higher.
Source: CoinMarketCap
The project behind MKR, MakerDAO, is a revolutionary Decentralized Finance (DeFi) platform, based on blockchain, that allows users to make collateralized loans in the form of the stablecoin Dai. MakerDAO has positioned itself as one of the industries leading DeFi platforms and will benefit from this rapidly growing sector.
The entire infrastructure for MakerDAO is scheduled to upgrade toward the end of November 2019 which will introduce a new wave of features to the system, including multi collateralized debt positions (MCD) - bringing a new wave of cryptocurrencies into the system as 2020 progresses.
For the reasons mentioned above, and more discussed below, I believe that Maker has the potential to surge by a total of 240% to reach my target of $2,000 at some point during 2020. The key area of resistance for MKR to penetrate is at the $800 level. Once MKR is able to break above this boundary, the cryptocurrency will be pretty free to surge much higher.
In this article, I’ll firstly cover a range of topics that I believe will influence MKR in reaching my $2,000 target during 2020 and then analyze MKR on the long term weekly and daily charts to highlight some areas of resistance on the way toward the target.
A Speedy Introduction To Maker
MakerDAO was one of the first projects to build on Ethereum and established itself in 2015. Maker(MKR) and the MakerDAO is a Decentralized Autonomous Organization that operates on the Ethereum blockchain. It is a smart contract platform that allows users to come and deposit collateral, in the form of cryptocurrencies such as Ethereum, to take out loans in the form of the stablecoin Dai.
Dai is pegged to the US Dollar through a variety of mechanisms and can only be created through the formation of Collateralized Debt Positions (CDPs). These CDPs are created when a user deposits collateral into the MakerDAO smart contracts. Maker is the utility token that runs on the MakerDAO platform (more on this below).
The key thing to understand about the difference between the stablecoin Dai and other stablecoins, such as TetherUSD, is that Dai is a completely decentralized cryptocurrency. Today’s stablecoins are typically issued by a central authority which creates areas of weakness within the confidence of the project. Dai, on the other hand, is only issued through CDPs in a completely decentralized and autonomous system.
MakerDAO itself is a very difficult concept to grasp. To find out more about how the DAO system works, take a look at this great in-depth article.
So Where Does Maker Come Into Play?
MKR comes into the function of the system as part of the mechanism that helps to keep DAI at $1 peg. It is also used to pay fees on the Maker network and gives users the right to voting power in the decentralized autonomous organization governance.
The governance grants the rights for users to vote for the project’s future and be involved in the decision making by voting on proposals. To find out more about Maker and how it helps to stabilize Dai, check out this post.
As MKR is needed to pay for fees on MakerDAO and is also needed for the rights to governance decisions, the majority of MKR tokens are not even on exchanges. Data from Santiment suggests that only a small 3% of the entire circulation for MKR is currently on exchanges;
Maker Grows After Strong Educational Campaigns
The entire MakerDAO system is growing at an alarming pace. The 2019 summer months were great for the Maker ecosystem as they see a surge in Dai activity. A report from MakerDAO reveals that activity for Dai has quadrupled from April through to July 2019.
The data shows a huge spike in August in which 109,000 newly added addresses were using Dai. This was largely a result of the Coinbase ‘Earn Dai’ campaign, designed to teach people how to generate Dai on the Maker Protocol. The team estimated that Coinbase introduced almost 76,000 new people to the protocol.
This statistic is taken further when looking at data from Santiment which suggests that since the Coinbase campaign, the daily active address count has surged from beneath 2K to over 3K per day.
Taking a deeper dive into who owns Dai in circulation, we see that more than half of all Dai is held in private user wallets, 20% of all Dai is held in decentralized applications, and 6% is held in escrow on cryptocurrency exchanges.
The Future Of MakerDAO Development Looks Very Bright
Development for the Maker project has been very stable during 2019 as data from Satiment shows a very busy period of development activity over the past year;
It is not surprising to see development activity going strong as the entire core of Maker smart contracts has been rewritten to introduce an exciting new upgrade to the MakerDAO system.
In early October, Rune Christensen, CEO of the Maker Foundation, announced that Multi-Collateral Dai (MCD) is ready to launch on November 18 2019. The launch of MCD will introduce a host of new features to the protocol with the main being the Multi-Collateral Dai system which will allow more types of collateral to be introduced to the ecosystem, and a new Dai Savings Rate (DSR).
The DSR is highly anticipated as it will help to differentiate Dai from other stablecoins on the market. This is because, after the MCD launch, users will be able to earn savings by just simply holding Dai. The user will have to deposit their Dai into a Dai Savings Rate smart contract to earn interest on their holdings through a DSR dApp that is provided by the MKR Foundation.
Source: blog.makerdao.com
The MCD launch will present all MKR holders with a governance decision for which tokens will be added to the system - a choice between ETH AND BAT. MKR holders will be provided with a Risk Report on each project that is to be added to help holders make their decisions.
Judging from previous blog posts, we can only assume that they intend to integrate a host of cryptocurrencies into their platform which may initially include Augur, BAT, DigixDAO, Golem, OmiseGo, and 0x.
Another change that will be introduced with the MCD launch is a very important change in terminology in which the term “Collateralized Debt Position” will be changed to “Vault”. This is intended to make it easier for newcomers on the platform. Furthermore, any new dai created under the MCD will be referred to as Dai and the old Single Collateral Dai will be referred to as Sai.
MakerDAO (MKR) Price Analysis
LONG TERM - WEEKLY CHART
LONG TERM - DAILY CHART
What Has Been Going On?
Taking a look at the weekly chart above, we can instantly see that MKR has been trapped between a range of $800 and $300 throughout the past 18 months. Once MKR clears the resistance at $800, it will be free to climb much higher.
Taking a closer look at MKR on the daily chart, we can see that MKR had surged by a total of 122% in 2019 from the February low of $360 to the April high of $800, however, the coin was unable to break above this level of resistance.
After making another failed attempt to climb above the $800 level in June 2019, MKR rolled over and fell by a steep 47% to find support at the $416 level in September 2019. This support was provided by a short term .786 Fibonacci Retracement level and had allowed MKR to rebound higher.
MKR has now broken above both the 100-days EMA and 200-days EMA and managed to smash above resistance at $560 as it makes its way toward the $600 level.
Are We Bullish Or Bearish (as of November 2019)?
The recent break above the $560 resistance level has now turned MKR into a short term bullish market as of November 2019. For this bullish market to be considered a long term bullish market, we would need to see a strong break of MKR above $800.
IF MKR was to reverse and fall beneath $400, we would consider MKR as bearish, in which case my 2020 prediction may be slightly invalidated.
Where Is The Resistance On The Way Up TO $2000?
On the way up toward my 2020 target of $2000, MKR must firstly overcome resistance at $600, $650, $700, $750, and $800. The resistance at $800 is deemed to be very significant as the market has not been able to overcome this resistance so far in 2019.
If the buyers manage to break above the resistance at $800, strong resistance is expected immediately at $817. This resistance is provided by a long term bearish .382 Fibonacci Retracement level that is measured from the all-time high to the December 2018 low. Above this, resistance lies at $850, $900, $951, and $998 (bearish .5 Fibonacci Retracement level).
If the bulls can push above $1,000, higher resistance can be found at $1,031 (1.414 Fib Extension), $1,088, $1,144 (1.618 Fib Extension, and $1,178 (bearish .618 Fib Retracement). Beyong $1,200, resistance is expected at $1,300, $1,434 (bearish .786 Fib Retracement), $1,587 (bearish .886 Fib Retracement), and $1,767 (previous ATH).
If the bullish pressure can create a fresh ATH above $1,767, we can expect immediate resistance to be located at $1,800, $1,850, $1,900, and then at my 2020 target of $2,000 which is resistance provided by a long term 1.272 Fibonacci Extension level.
Conclusion
MKR is the cryptocurrency behind a revolutionary DeFi lending platform. MakerDAO has created a service that allows for collateralized loans without the need for credit checks or background checks. This is because it is completely managed by an autonomous and decentralized system.
MakerDAO is quickly gaining the attention of new users as educational campaigns help people to understand this complicated technology. The team has scheduled updates in November that will allow for a host of new cryptocurrencies to be used as collateral as 2020 progresses - bringing in a wider range of new users.
For these reasons, I strongly believe that MKR can rise by 240% to reach my $2,000 price prediction at some point in 2020.
