01 Nov 2024 Anthony Lehrman
Maker (MKR) On The Rise After Launching A Buyback Program
The Maker (MKR) token has gained a lot of attention in the cryptocurrency market over the last week, rising by an incredible 26%. The launch of a ground-breaking token buyback program by MakerDAO, the top decentralized finance (DeFi) lending platform, coincides with this extraordinary price movement. Maker (MKR) is one of the biggest and most established DeFi lending protocols as the DeFi ecosystem grows. It has gained recognition for creating the popular DAI stablecoin, which has a market value of $4.6 billion.
The MKR Token Buyback Program Causes a Boom
The launch of a token buyback program is responsible for the recent spike in Maker (MKR), the governance token of the $5.3 billion decentralized finance (DeFi) lender MakerDAO. The Smart Burn Engine token buyback program is intended to take MKR tokens off the market. In order to buy MKR tokens from a UniSwap pool, excess DAI stablecoins from Maker's surplus buffer are allocated. The initiative's governance proposal seeks to improve the token's governance and value while actively involving MKR holders in voting on important proposals.
Through this buyback program, the lending platform is expected to remove about $7 million worth of MKR governance tokens from the market over the course of the following month, according to blockchain data. The buyback represents a 0.7% monthly reduction in the token's supply, which could improve MKR's scarcity and value proposition given its roughly $1 billion total market capitalization. The cryptocurrency community is probably going to show more interest in and investment in this calculated move.
MakerDAO has already bought about $230,000 worth of MKR tokens in the last day, demonstrating the token buyback program's encouraging outcomes. This early success suggests that the buyback initiative is gaining traction and attracting investor interest.
Apart from the token buyback initiative, MakerDAO has been actively broadening its sources of income by allocating its DAI reserve assets to conventional financial instruments like government bonds and bank loans. This calculated move has paid off because it allows the platform to produce steady income from yields, which lays the groundwork for future expansion and long-term value. Maker is a desirable investment option because of its diverse revenue streams, which give investors and the larger DeFi community confidence in contrast to meme coins with no real business prospects.
In addition to the DAI reserve investments and token buyback, MakerDAO is also going through a major transformation that includes improvements for the DAI and MKR tokens. Additionally, the platform is expanding into SubDAOs, which are smaller, independent organizations with the ability to issue their own tokens. These advancements demonstrate MakerDAO's dedication to ongoing innovation and advancement and portend a vibrant future for the platform.
MKR price prediction
Given that bullish pressure is also increasing in the broader cryptocurrency market, MKR's DeFi token could rise by almost 40% to $1,721 in the coming weeks if it breaks above the upper trendline around $1,450.
MKR would need to break through the crucial resistance level at $1,441 in order to finish such a move. On the daily chart, it is noteworthy that the 50-, 100-, and 200-day Simple Moving Averages (SMA) converge with important resistance levels.
Both the SMA and the momentum indicator of the Relative Strength Index (RSI) are testing their respective descending trendline and midlines. The bullish momentum might be bolstered by a cross above both lines.
Below its midline, the Awesome Oscillator (AO) has displayed a string of descending green bars, indicating waning bearish momentum.
According to Santiment data, MKR's Market Value to Realized Value (MVRV) Ratio, which calculates the average profit and loss for all holders, is at -25%. This means that the average loss for all MRK investors is 25%. On October 23, though, the MVRV appears to have bottomed out.
Additionally, according to DefiLlama data, MKR's revenue has been increasing once more, increasing by 75% since August 28.
Source: DefiLlama
However, according to CryptoQuant's data, MKR's exchange flows have been trending upward over the last three weeks, so investors should be wary of a possible price impact. A token may experience strong selling pressure as exchange reserves rise.
Furthermore, following an investment of roughly $25 million to rebrand its governance token and products, the MakerDAO community is contemplating removing the SKY brand name. On November 4, the protocol will hold a governance poll to determine whether to stick with the Sky name or go back to Maker.
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