Maker’s ($MKR) price has been notably volatile in the last few weeks, marked by a sharp rally in mid-February and a subsequent pullback.
After putting in a low in mid-February, $MKR blasted up to $1,700 but has pulled back to around $1,350 as of this writing. That surge and subsequent pullback again highlight just how volatile and whipsaw-y the market is right now.
In the midst of this price action, analyzing the cost basis distribution of $MKR investors offers some valuable insights into not only how different groups have responded to the recent price movements but also what levels they’re paying attention to as (potential) supply and demand levels going forward.
Investor Behavior: Cost Basis Distribution and Key Clusters
Groups of investors that interact with $MKR yield important insights about its future. And we’re able to glean a good amount of those insights from a key analytical tool that looks at the Cost Basis Distribution of $MKR. This tool helps us understand, with an impressive degree of clarity, how different kinds of investors have accumulated $MKR at various price points. And most importantly, it gives us a good read on whether those investors have recently adjusted their positions.
By late January, there was a thick supply around 60,000 $MKR, with an average cost basis of about $1.49K. At this time, the price of $MKR was already lower, meaning that the coin holders had likely accumulated earlier when the price dipped before doubling down on their positions, as $MKR was perceived to have reached a low point. This group of investors, who had demonstrated strong hands by buying at lower prices and continuing to accumulate, became crucial real players in the next market movements.
These early accumulators maintained their holdings through the market’s lowest points, which included a brief dive in February. They seemed to be sticking with a long-term, bullish view of $MKR, even as its price slumped. But as the price started to recover in mid-February, the same accounts that had previously been accumulating began adding to their positions again, further bringing down their cost basis. By February 10 and February 16, these same addresses were buying again, slightly below their previous accumulation targets, in what can best be described as an optimization of their cost basis.
By the end of February, $MKR hit an altitude of about $1,700, and many of its earlier backers started to whittle down their stakes. Now, it seems this crew has mostly abandoned ship; it has only about $10,000 left in $MKR.
Key Support Levels and Supply Clusters
While we keep a watchful eye on the price fluctuations of $MKR, we notice two big supply clusters that might act as important support levels for this token in the short term. These areas show where large amounts of $MKR were purchased and could now serve as price floors for any significant pulls back that may happen in the future.
Key supply cluster #1:
Approx. 45,000 $MKR turned over at $913 on February 9. Could make for a strong support level due to investor reticence to sell $MKR at a loss.
Key supply cluster #2:
Approx. 15,000 $MKR turned over at $1,178 on November 3. Might act as a support level due to those same sellers.
Invoking ‘supply clusters’ may be a little esoteric, but it’s conceptually similar to talking about support and resistance levels in technical analysis.
It is interesting that during the latest volatility, addresses with a cost basis close to $1.1K did not participate much at all. These holders seem to have been pretty passive, not accumulating during the price dips and not rallying with the recent spikes. The lack of activity from these addresses could suggest a group of investors that is either less engaged or more cautious. And price swings might not be quick triggers for this group. More on this later.
Current Price Levels and Short-Term Outlook
Examining the current distribution of $MKR’s supply over the past week reveals several crucial price levels where there’s a significant concentration of supply. The largest cluster is at $1,385, where approximately 28,000 $MKR are held. This price area could function as a substantial resistance point. Many of these holders might be inclined to sell if the price approaches their cost basis. Meanwhile, about 26,000 $MKR are held at $1,442. That’s another pivotal level. And then, there’s $MKR basing at $1,451, where another 50,000 tokens are held. These three price levels—$1,385, $1,442, and $1,451, in that order—are crucial near-term determinants of $MKR’s price action.
Currently trading at approximately $1,350, MKR finds itself at price levels likely to be pivotal in determining the token’s short-term trajectory. Should the price manage to break through the nearby clusters of resistance and maintain its position above them, it may well indicate that the token’s immediate future includes some kind of upward momentum. Conversely, if it can’t hold these levels, we could see it retrace back to what we’ve previously identified as some key support milestones.
Conclusion
The price of $MKR has changed a lot over the last month, which shows how complicated investor behavior and market sentiment really are. Some investors have been buying the token on dips and then cheering it on when the price rises. Other investors have been relatively unexcited, and some have actually been selling the token. If you look at the price formation from different angles, the clusters that supply the market with tokens at various price levels are most important for future price action.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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