Maker (MKR) became the latest cryptocurrency to soar on a Coinbase announcement after soaring over 500% in the past 24 hours, crossing the psychological resistance at $500. The Coinbase effect*, a phenomenon coined back in the 2017 bull market, is returning to the market giving an alt-season feel.
However, tokens that have experienced the “Coinbase effect” in the recent past have seen successive wild dumps on price raising the question – can the Maker bulls hold the current levels?
*The “Coinbase effect”, was a popular term used back in 2017 and 2018 when tokens sprouted to huge gains following a listing on the ‘prestigious’ U.S based cryptocurrency exchange.
Maker jumps over 30% in a day
The crypto market is breaking off a sideways trading movement, as the total cryptocurrency market capitalization gained $7 billion in the early hours on Saturday, New York time. It’s the altcoin market that saw the bulk of the gain led by Ethereum (ETH), which has gained 6.48% in the past day to trade above $230 for the first time since February.
In all the alt-market majesty shown on Saturday, Maker (MKR) stands out – registering 50.57% dollar-increase from intraday lows of $357 on Friday, 29th May to highs of $539, on May, 30. The DAI-producing token’s price has finally recovered from the horrors in March when the platform lost over $8 million leading to a huge fall in price.
The “Coinbase effect” on Maker
The spike in MKR price came shortly after Coinbase announced support of the MKR on its platform, as mentioned above. Coinbase is expected to start trading the token on its Coinbase Pro platform on Monday, June 8, at 9 AM Pacific Time.
On Monday, June 8, our MKR-USD and MKR-BTC order books will enter transfer-only mode, accepting inbound transfers of MKR in supported regions. Orders cannot be placed or filled. Order books will be in transfer-only mode for a minimum of 12 hours. https://t.co/LJuwNQi7ot
— Coinbase Pro (@CoinbasePro) May 29, 2020
It is no secret that Coinbase, alongside Winklevoss-owned Gemini exchange, holds a certain appeal given their highly regulated nature across the United States. Coinbase, one of the largest cryptocurrency markets in the richest economy in the world, also employs a very strict nature on listing tokens to avoid run-ins with securities legislation.
The altcoin market is starting to react to Coinbase listings and big corporate partnerships in a similar manner to 2017 giving off bullish sentiments. However, there are doubts about the stability of such runs as they are followed with huge dumps as seen recently with Thai-based token, OmiseGo (OMG).
A pump and dump scheme
Coinbase announced the listing of OmiseGO (OMG) on its institutional investors focused, Coinbase Pro, on May 21 set off a 40% increase in a few hours. However, since hitting a 10-month high OMG has retraced over 18% to trade at $1.56.
Will MKR face the same consequences given the overbought market and fleeting frenzy of the “Coinbase effect” or will the bulls hold the $500 key support level at the close of the week?