- MKR shot up by 13% to $1,175 on 31 August, but retraced to $1,098 at press time
- On the day of the price boom, exchange inflows and whale transactions rose dramatically
MKR, the governance token of the leading stablecoin lending protocol MakerDAO, defied the wider market slump to emerge as one of the best-performing cryptos over the last week.
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According to data from CoinMarketCap, the asset recorded gains of 4.5% in the last seven days. Over the same period, Bitcoin [BTC] could only manage a marginal increase of 0.19%. At press time, MKR was being traded at $1,098.
The weekly gains were amplified by the rally on 31 August, during which MKR shot up by 13% to $1,175. While the price pump was significant, some voices from the market expressed apprehensions about its sustainability.
Was MKR’s pump manipulated?
In a recent post on X, well-known on-chain analyst Ali Martinez called the dramatic upswing in MKR’s value as “manipulated.” In fact, he cautioned that the token could fall to $1,000 or even lower.
To buttress his argument, Martinez drew attention to the behavioral patterns of large investors, sometimes known as whales.
Notably, on the day of the price boom, inflows to exchanges spiked as well. Simultaneously, there was nearly a 10,000 hike in MKR’s supply on exchanges.
Moreover, transactions worth more than $100,000 surged as the price began to appreciate. These developments implied that influential whale investors transferred their holdings to exchanges with an intention to sell them at a profit.
Schemes like pump-and-dumps have been fairly common, not just in crypto markets but TradFi as well. It’s basically where a person or group starts to artificially inflate the price of an asset by disseminating positive news around it.
Once unsuspecting investors are lured in and the price is sufficiently “pumped,” the holders start dumping their assets at profits. This sends the price of the asset tumbling down and new investors are stuck with a low-value asset.
Generally, small to mid-cap assets are targeted for these schemes. Now, although there was nothing to suggest that MKR’s case resembled a pump-and-dump, retail investors should still exercise great caution.
Realistic or not, here’s MKR’s market cap in BTC’s terms
A new rivalry developing?
MKR has been in the news for other reasons as well. For example, Ethereum [ETH] Founder Vitalik Buterin recently liquidated a significant chunk of his MKR holdings, contributing to an immediate fall in MKR’s value.
Buterin’s move came after MakerDAO Co-founder Rune Christensen suggested the use of Solana’s [SOL] code to build its new blockchain.