Key Takeaways
- Following an impressive rally fueled by the “Coinbase Effect,” Maker took a 40% nosedive and now it’s trying to regain a critical support level.
- Kyber Network, on the other hand, is up more than 6x and different metrics show it may have more gas in the tank.
- Meanwhile, Aave could be preparing for a correction after the significant bullish impulse it has gone through.
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Demand for DeFi tokens continues to rise, and Maker, Kyber Network, and Aave are a clear example of this. These cryptocurrencies have enjoyed an impressive rally over the past few months, and this trend may continue.
Maker Aims to Regain Critical Support Level
Maker is one of the latest beneficiaries of the “Coinbase Effect.” This is a phenomenon where a token’s price skyrockets after being listed on the American exchange.
Indeed, the Ethereum-based DAO saw its price surge nearly 120% after Coinbase Pro announced that it would be listing it on its retail platform.
On June 11, however, MKR reached an exhaustion point as its price took a 40% nosedive. After hitting a new yearly high of $730, Maker dropped down to $447.
Data from IntoTheBlock suggests that addresses mostly drove recent price action with millions of dollars in MKR, colloquially known as “whales.”
The number of on-chain transactions larger than $100,000 was hovering around four operations per day in late May, but after Coinbase’s announcement, it shot up 3,000%.
A few days later, the number of significant transactions on Maker’s network peaked at 123 transactions per day, which eventually led to the massive correction.
Now, IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model reveals that Maker is trying to regain the $542 level as support. An increase in demand that allows the DeFi leader to move past this barrier could increase the odds for a further advance.
Based on this on-chain metric, the next most significant area of resistance sits between $586 and $605. Here, roughly 843 addresses bought more than 56,000 MKR.
Due to the magnitude of the bullish impulse Maker went through, another downswing cannot be taken out of the question. If the bears were to step in, the IOMAP cohorts show that the most critical area of support to watch sits around $500, where approximately 890 addresses bought nearly 62,000 MKR.
This demand zone must hold in the event of a correction for the uptrend to resume. Otherwise, one could expect more losses to come.
Kyber Network Seems Poised for Further Gains
Kyber Network has enjoyed a substantial rally since the beginning of the year. Since then, this cryptocurrency has gone up by nearly 640% from a low of $0.18 to a high of $1.35.
The exponential buying pressure behind it seems to be fueled by mounting speculation regarding an upcoming protocol upgrade scheduled for later this year. Dubbed Katalyst, the hardfork is set to introduce staking rewards, allowing KNC holders to earn part of the fees collected by the network for helping keep it secure.
Despite the massive gains already posted, multiple technical indexes reveal that Kyber may have more room to advance higher. The TD sequential indicator, for instance, is currently presenting a buy signal in the form of a red nine candlestick on KNC’s 4-hour chart.
The bullish formation forecasts a one to four candlesticks upswing or the beginning of a new upwards countdown. A green two candlestick trading above a preceding green one candle can serve as confirmation for the optimistic outlook.
Additionally, a bull pennant seems to be developing within the same time frame. The 102% upswing that took place between June 8 and 10 created the flagpole. And, the symmetrical triangle that developed since then formed the pennant.
A further increase in buy orders behind Kyber Network that allows it to break out of this pattern might see the token surge 47% towards $1.80.
This target is determined by measuring the height of the flagpole and adding that distance to the breakout point.
Aave Is Bound For a Retracement
Like Kyber Network, the decentralized peer to peer lending protocol Aave has also seen its price skyrocket since the beginning of 2020. Thus far, this altcoin has gone up by more than 630%, and it recently surpassed the $100 million market cap milestone.
We’ve officially reached the $100M market size milestone! 🥂🎊🎉
Much ❤️ to the Aave & DeFi Fam. We could not have done this without all of your feedback and support!
Data credits to @defipulse 🙏
🔊sound on pic.twitter.com/v4UXQKpFue
— Aave (@AaveAave) June 10, 2020
Nonetheless, Santiment’s Token Age Consumed index registered a significant spike in idle LEND tokens moving between addresses in the last few hours. This on-chain metric measures how many coins have recently changed hands, multiplied by the number of days since they last moved.
“Spikes in ‘Token Age Consumed’ can signal changes in the behavior of some long-term holders, and tend to precede increased volatility for the coin’s price action,” according to the behavior analytics platform.
For over the past three months, there has been a high correlation regime between old tokens changing hands and the price of this altcoin.
In mid-April, for instance, Aave plunged by 10% after Santiment recorded a considerable amount of idled tokens moving between addresses. Later that month, the open-source non-custodial token plummeted another 19% when the ratio of old tokens changing hands began to increase.
Now that roughly 5 million idled LEND are on the move, history could be about to repeat itself, suggesting a downward impulse on the horizon for this DeFi token.
The TD sequential index adds credence to the bearish outlook. This technical indicator is currently presenting a combo 13 candlestick on LEND’s 4-hour chart, which is a negative sign. And, the upcoming candlestick will likely be a green nine candle.
The combination of these two bearish formations increases the odds of a steep decline.
IntoTheBlock’s IOMAP model reveals that in the event of a correction, the most significant support barrier sits between $0.093 and $0.097. Around this price level, roughly 790 addresses bought nearly 18 million LEND.
The strength of this support wall will determine whether or not Aave will continue the impressive run-up that it has enjoyed throughout this year.
The DeFi Market Moves Forward
The narrative around decentralized finance (DeFi) has strengthened this year, according to Anil Lulla, a co-founder at Delphi Digital.
While Bitcoin is up nearly 2% in the last 30 days, some DeFi projects, including Maker, Kyber Network, and Aave, have surged over 50%.
Santiment has registered a substantial increase in the number of addresses holding these tokens too, which coincides with the rising prices.
The upcoming launch of Ethereum 2.0 may also have the ability to boost the development of the projects previously mentioned. Consequently, having a positive impact on the market valuation of different DeFi tokens, said Hugh Karp, the CEO and founder of Nexus Mutual.
“From our point of view, [Ethereum 2.0 staking] will be very interesting because we want to earn investment returns from the float. We hold a chunk of ETH so we will be able to start staking that and earning a return, which is obviously very important for insurance entities,” affirmed Karp.
With the increasing interest around DeFi, investors should pay close attention to this market segment as it aims to revolutionize the global financial system.
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