MakerDAO’s TVL has fallen over the past week. The price has also suffered and has fallen drastically in recent days

MakerDAO [MKR] has experienced a substantial drop in total locked value over the past seven days. This is unusual, given that his contemporaries usually saw something positive in their TVL.

Read Creators [MKR] Price Forecast 2023-24

MakerDAO’s TVL was a whopping $6.79 billion in early December. However, it dropped to $6.24 (at the time of going to press) in recent days. Most of that TVL drop happened in the past three days.

This outcome may be related to one of MakerDAO’s latest announcements.

Source: DefiILma

MakerDAO’s announcement confirmed the activation of liquidations for several stablecoin vaults if their collateral ratio fell below the minimum threshold ratio of 101%. The activation of the liquidation threshold was voted on in November and this could be a major reason why some investors have chosen to pull their money out of MakerDAO pools. However, this is still within the realm of speculation.

MakerDAO suffers across the board

It seems that the whole situation has scared the hell out of MKR investors. The crypto token fell as much as 7% over the past three days to a press price of $613. This drop brought the token closer to its previous 2022 low of $581 in September.

Source: TradingView

In terms of MKR indicators, the RSI remained above the oversold zone. However, the MFI fell back into the oversold territory after a sharp outflow. But can MKR achieve a fast recovery like in September?

There are a few factors that can help determine whether MKR demand will recover. For example, the amount of MKR tied up in smart contracts has risen sharply since early December. It’s only declined slightly over the past three to five days, implying there’s still significant demand from a utility standpoint.

Source: Glassnode

Despite benefiting from smart contract offerings, MKR has suffered from other aspects, especially those related to market demand. MKR’s speed and network growth have dropped significantly over the past seven days. This indicated that the network question of utility took a hit.

Source: Sentiment

Nevertheless, the token’s speed saw some benefit, even though network growth was still low. This could be a sign that there is some accumulation on the recent lows.

However, there is one metric that can provide a clearer picture of MKR’s demand under the latest conditions. MKR’s weighted sentiment rose sharply in the first few days of the month.

This suggested that investors were gearing up for a rally. However, the bullish sentiment quickly faded and remains unchanged.

Source: Sentiment

A strong recovery is unlikely without at least an increase in weighted sentiment. In any case, MKR was trading at a healthy discount at press time, so there is potential for an increase in the coming days.

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