Maker price could suffer decline as MKR reserves on exchanges climb

●Maker’s large wallet investor 0x8a1 deposited $6.91 million worth of MKR tokens to FalconX exchange.

●MKR supply on exchanges climbed in the past week, increasing the selling pressure on the asset. 

●MKR token holders that acquired the asset in the past 30 days are sitting on nearly 9% unrealized profits. 

Maker (MKR) price increased nearly 5% in the past week, as MKR climbed to $1,537 on Binance. The utility token extended its gains for the fourth consecutive week, alongside Bitcoin’s price rally. However, there are increasing signs that the current uptrend is about to end as Maker’s large wallet addresses have begun taking profits, depositing MKR holdings to exchange wallets.

Maker inflow to centralized exchanges rises

Based on data from crypto on-chain tracker Spot on Chain, a large wallet address 0x8a1 deposited $6.91 million, or 4,500 MKR tokens, to trading platform FalconX. The whale still holds 18,890 MKR worth $28.98 million in a different wallet address.

Whale transfer of MKR tokens to FalconX

Santiment data shows that spikes in whale transactions valued at $100,000 or higher have coincided with profit-taking, according to the Network Realized Profit/Loss (NPL) metric. NPL keeps track of the profit/losses booked by MKR token holders that transacted on a given day. NPL for MKR shows consistent profit-booking on days where whale transactions exceeding $100,000 spiked, as seen in the chart below.

There were larger spikes in profit-taking by whales in the past six months, while whale transactions have reduced in the past two weeks as unrealized profits dropped from 25% to 9%. This points to an increasing likelihood of a correction in MKR.

MKR NPL and whale transactions (>$100,000), Source: Santiment.

Another catalyst for the correction is an uptick in MKR token inflow to exchanges. A seven-day centralized exchange netflow chart shows a spike in MKR inflow on Thursday.

CEX netflow of MKR

Santiment data points at the climbing MKR supply on both centralized and decentralized exchanges. Supply increased from 7.99% (of the total MKR supply) on November 23 to 9.25% on November 30, a considerable uptick in a one-week time frame.

MKR supply on exchanges and exchange flow balance, Source: Santiment.

Another key on-chain metric, the MVRV ratio, supports the bearish outlook on MKR. MVRV ratio shows the average profit/loss of all the asset’s tokens currently in circulation based on the current price.

According to the MVRV ratio for a 30-day timeframe, MKR holders who acquired the token in the past thirty days are sitting on nearly 9% unrealized profits. In this context, there is an increasing chance that MKR holders engage in profit-taking and increase the selling pressure on the asset. 

MVRV ratio for MKR (30-day), Source: Santiment.

While on-chain metrics support a bearish outlook for MKR, the extent of profit-taking is likely to be limited due to the limited upside potential (nearly 9%). However, it is important to note that a crash in Bitcoin price could usher double-digit corrections in altcoins.Still, Maker has shown considerable strength through Bitcoin price corrections in 2023.