- Ethena forced a breakout from a descending channel and seemed poised to rally higher
- Network-wide distribution and long-term holders still facing losses suggested ENA might need more time
Ethena [ENA] made a bullish market structure break on the 1-day timeframe. This shift occurred on 10 May, when the previous lower high at $0.35 was breached on the charts.
Source: ENA/USDT on TradingView
Interestingly, this market structure break came alongside a breakout past the descending channel (white). Over the past week, ENA has retested the channel highs as support and strove to climb higher.
With Bitcoin [BTC] nearing new all-time highs, bullish sentiment across the crypto market has been nearing euphoria. This could overflow into the altcoin markets and take prices higher.
Technical analysis of ENA revealed a hike in trading volume over the past ten days. The OBV also broke above the highs made in March and April. Meanwhile, on the same 1-day timeframe, the RSI did not form a bearish divergence. The indicator reflected bullish impetus and buying pressure and pointed to further gains for Ethena.
On-chain metrics warn of an overvalued ENA
Source: Santiment
The daily active addresses for Ethena were at commendable levels over the past three weeks. Its peak activity on 9 May was the largest single-day count since 6 February.
And yet, the demand for the Ethena token was not widespread. The mean coin age metric has been on a steady downtrend since mid-February, with occasional rallies. Such a bounce in the mean coin age was seen in May.
Generally, a rising MCA alludes to network-wide accumulation. However, its low values compared to December and January suggested that Ethena might be nearing the tail end of a distribution phase. Despite the breakout past the channel, ENA did not quite have a strongly bullish outlook on the higher timeframes at press time. Especially after retracing all the gains made in November and December.
Finally, the MVRV ratio agreed with this finding, showing that the 180-day holders were at a mild loss of 14.5%. Combined with the slumped MCA, ENA did not appear to offer a long-term buying opportunity.
Moreover, the elevated NVT values at certain times during the past few months showed volatile transaction volumes. This could be a sign of an overvalued asset, as the on-chain transfer volume did not match the market cap growth.
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