Maker (MKR) has experienced a significant surge of 23%, contributing to its impressive rally. However, caution is advised as on-chain metrics suggest that this upward trend may not be sustained for much longer.

Over the past month, Maker has showcased exceptional performance, witnessing an 86% increase in value. This bullish momentum has continued unabated, positioning MKR as the top-performing coin among the leading 100 assets in the cryptocurrency market. Nonetheless, a closer examination of the on-chain data suggests a potential reversal on the horizon.

One critical metric to assess Maker’s market sentiment is the MVRV ratio. This ratio measures the relationship between the market capitalization and realized capitalization of MKR. The market capitalization represents the conventional total valuation of the asset, while the realized capitalization is a unique model that considers the last transferred token price on the blockchain as the token’s “real” value.

When the MVRV ratio exceeds 1, indicating that the market capitalization surpasses the realized capitalization, it implies that the average investor is likely holding some profits. Conversely, if the ratio falls below 1, it signifies a deficit. Currently, the MVRV ratio for Maker stands at 59%, indicating that investors who purchased MKR within the last year are collectively holding approximately 59% in profits.

Examining the trend of the 365-day Maker MVRV ratio over the past few months reveals a sharp rise in conjunction with price surges. At present, the ratio sits at historic highs, suggesting a potential correction may be imminent. Market history has shown that as the ratio reaches higher levels, investors often opt to cash in their profits, momentarily halting price momentum.

Considering the elevated values of the MVRV ratio, it is logical to anticipate a cooldown and a temporary setback for Maker’s recent rally. Investors may opt to secure their gains, thus causing a pause in the upward price trajectory.

While Maker (MKR) has experienced a remarkable rally, on-chain metrics provide valuable insights into potential price movements and investor sentiment. The Market Value to Realized Value ratio (MVRV) indicates that MKR holders are currently sitting on considerable profits. However, historical patterns suggest that excessive values of this ratio usually precede corrective phases. Therefore, careful attention is advised as Maker may face a cooling down period soon. At the time of writing, MKR is trading near $1,300, displaying a 23% increase over the past week.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.