Maker-Dai (MKR) Price Prediction for 2021: MKR Making the Most of the DeFi Boom
Last Update: July 14th, 2021
Maker (MKR) – Forecast Summary
|Maker Forecast: H2 2021|
Price: $4,000 – $4,500
Price drivers: Safe haven retreat, Crypto market sentiment
|Maker Forecast: 1 Year|
Price: $5,500 – $6,000
Price drivers: Tighter monetary policies, Positive risk sentiment, Dai progress
|Maker Forecast: 3 Years|
Price: $10,000 – $ 15,000
Price drivers: Dai stablecoin, Crypto market sentiment, Higher bond yields
The Maker (MKR) coin started as an idea in 2015 and was fully introduced in the cryptocurrency market in 2017. It benefited immensely from the positive sentiment in the crypto market at the end of that year, making some major gains as MKR/USD surged from around $250 to $1,750 by January next year. Although it came back down in Q1 of 2018 as did all other cryptocurrencies and it traded in a range between $300 and $700 for three years until the beginning of his year, when the positive sentiment in this market started affecting Maker as well, sending it surging higher, reaching new record levels several times.
MKR reached $5,000 in April this year after joining the crypto surge in January 2021, while peaking at $6,350 by early January. MKR/USD trades well off the highs as of July, after the crash in the crypto market. Maker Dai lost more than 70% 0f its value after the crash, falling below $2,000, but the highs have been getting slightly higher after every retreat, so the larger bullish trend is still on despite the bearish momentum of the last two months,
Recent Changes in the Maker Price
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Factors Affecting Maker-Dai
The Maker network is one of the earliest projects in the decentralized finance (DeFi) world, which makes it follow this industry. The more the DeFi industry grows, the more Maker grows, as does Ethereum. This industry has been booming for the past year, helping cryptocurrencies and in particular the coins which operate in this sector. The sentiment in the cryptocurrency market is always a major factor for all cryptos, with the sentiment in Maker being more bullish than in the rest of the crypto market now.
Maker (MKR) Price Prediction for the Next 5 Years
Dai is a stablecoin and Maker is a supporter for Dai, to keep the value balanced as close to 1:1 with the USD. As of May 2021, DAI is one of the most popular stablecoins (cryptocurrencies whose prices are pegged to the USD or another traditional currency). It is the 35th largest cryptocurrency at over $4.476 billion in market capitalization. Dai’s market cap is obviously close to that of Maker, at $4,770 billion and it has more active addresses than USDT — the largest stablecoin on the market.
What Is Dai?
In order to understand what the Maker token is, first we have to understand what the Dai coin is. This first/main product of the Maker organization is called Dai. Dai is a stablecoin just like USDT, but one which relies completely on the blockchain and its stability unmediated by the legal system or other counterparties. Dai is similar to Tether, but the organization operates in a different way. Stablecoins are coins pegged to a fiat currency or a digital one. Tether and Dai are pegged to the USD to the value of 1:1. But while Tether increases the USD reserves by the same amount of new Tether issues, Maker doesn’t keep the Dai pegged to the USD in the same way. Dai retains its balance relative to the value of the USD via Maker, and that’s where the Maker token comes in.
If you hold other cryptos, for example Ether, and want to own Dai, you have to create it first. You would be to send your ether to a “collateralized debt position” CDP, which is a type of software/smart contract that runs on the Ethereum blockchain, while living within the Maker ecosystem inside this blockchain. If the price of Ether goes up, that wouldn’t be a problem, since it would surpass the capitalization rate which could be at a certain rate which is decided by Maker MKR holders, say 120%. That would mean that you would need to place as collateral ether in the value of $1.20 to own 1 Dai, which is $1. So you basically take a loan in Dai with Ether and put it in the CDP smart contract. If the value of the Ether that you have as collateral in the CDP goes below a certain threshold, in our example 120%, you either have to pay back the smart contract or it will auction it off to the highest bidder.
What Is Maker?
So, we mentioned above that Maker MKR lives to keep the Dai peg to the USD stable, while Ether works as a collateral for Dai to be specific. If the price of [[ETH/USD]] would fall too fast too low, it would create a situation where the one-to-one collateralization ratio would change in a very short period for the system to handle. But the Maker holders act as the buyer of last resort in this case. If the Ether collateral in the CDP smart contract is not enough to cover the amount of Dai in circulation, new Maker coins are created and sold in the market in order to raise the additional collateral, which would decrease the value of Maker.
This makes the MKR coin holders responsible when voting to regulate the parameters, more importantly the collateral ratio that the CDP contracts use when creating Dai. So, this is another important aspect of Maker holders. They have the right to vote on a number of changes to the Maker Protocol. The voting power depends on the amount of the Maker they hold.
The Sentiment for Maker Has Turned More Bullish Than the Crypto Market Average
The DeFi market has been absolutely booming since the middle of 2020, taking into account all that has been going on around the globe economically, politically and from a social perspective. This has increased the uncertainty across all markets and made the future of all traditional fiat currencies really uncertain. That has driven the public into cryptocurrencies, which has seen an amazing boom and the situation is only getting better as they continue to surge higher. Maker has surged in value and in market capitalization which now stands at $4.467 billion, with a 24-hour trading volume of $396,604,893 USD. As of October 2020, DAI is probably the most popular stablecoin in circulation. It is the 25th largest cryptocurrency at over $800 million in market capitalization and it has more active addresses than USDT — the largest stablecoin on the market.
Technical Analysis Maker/Dai – DAI Market Cap Keeps Growing, As MKR/USD Keeps Surging
MKR/USD is more than 10 times higher so far in 2021
Maker started life in 2017 as we mentioned above at around $25, and it kept increasing gradually, as it moved to $250, trading around that area until the surge in the crypto market at the end of the same year. Maker increased to $1.391 by December 2017 and in January the next year it reached as high as $1,578. MKR/USD traded around $400-$500 until March 2020 when the first reaction to the coronavirus outbreak sent it down to $250. Although, the crypto market recovered fast and coronavirus turned out to be a positive event. MKR/USD turned to the previous range but it was trading sideways until January 2021, with the 20 SMA (gray) acting as support on the monthly chart.
Maker has been exploding higher since April
The surge eventually came at the beginning of 2021, lasting until the beginning of May As , when China brought the cold war on cryptos into the surface and the crypto Market tumbled lower. The price fell close to the 50 SMA (yellow) on the weekly chart, piercing the 20 SMA (gray), but there was no close below it and MKR/USD bounced off this moving average. But, the break eventually came in June during the second wave of crypto selloff and the 20 SMA was broken to the downside. Although, the 50 SMA still held as support, sending Maker bouncing higher, while the 20 SMA turned into resistance. Now Maker seems stuck between these moving averages.
On the daily chart, the 200 SMA has been broken after holding as support initially, but the low at $1,900 is still holding as support. The 100 SMA (green) has now turned into resistance and at the moment MKR/USD is sliding lower again, but it still looks better than half of the crypto market, which is much more bearish.