A trader in the cryptocurrency market lost $1.13 million within a span of 50 days, giving up on his MakerDAO (MKR) holdings following the Sky announcement. MakerDAO is a prominent decentralized finance (DeFi) governance protocol designed to support the DAI stablecoin backed by multiple collateral types.
A recent report by Lookonchain highlighted the trader’s possible surrender from the Ethereum address ‘0x3c7…’ on September 14. The trader, who chose to remain anonymous, transferred 1,100 MKR tokens to a Binance address at a rate of $1,613.
Had the trader sold at the deposit price, the proceeds would have amounted to $1.77 million. However, the 1,100 MKR were valued at $2,643 on July 27 when they reached the monitored address.
The report revealed that the trader converted about $2.91 million into $1.77 million, resulting in a loss of $1.13 million.
MakerDAO underwent an unusual rebranding to Sky Ecosystem (SKY) in late August 2024, with DAI being rebranded as USDS. Rather than simply renaming the token, Sky was introduced as a new token and distributed in part to MKR holders through an airdrop.
Market participants viewed this move skeptically, fearing that the airdrop would render MKR redundant upon completion, causing uncertainty and apprehension. The decision to launch a new token was seen as a short-term fundraising tactic, potentially diminishing the ecosystem’s value.
Interestingly, the trader who suffered a $1.13 million loss in a short period bought MKR before the rebranding and sold it afterward in response.
Due to prevailing fears, the MKR token plummeted by 18.58% in 30 days and is currently trading at 1,596. Traders in the cryptocurrency market might already be factoring in its replacement and anticipated obsolescence following the announcement of SKY.
The $1,500 psychological support level is crucial for MKR to prevent further declines. However, if sentiment remains negative and the selling pressure persists, this support might falter. Some demand for MKR could arise from traders eyeing the SKY airdrop.
The recent capitulation of the crypto trader serves as a cautionary example of how even robust cryptocurrencies can catch the market off guard. Value perceptions of an asset can be swiftly altered within a few weeks, potentially prompting capitulation.
Finbold has been monitoring and alerting on fundamental factors that could impact prices, such as token unlocks from Ethereum second layers and rival L1 networks. Moreover, DeFi traders leveraging their positions, like millionaire James Fickel, have shown a tendency to capitulate in the current market environment.