Ethena’s Mini Rally: A Trap for the Overeager?

Buyers chasing Ethena’s recent uptick might want to pump the brakes—this ’rally’ smells more like a dead cat bounce than a trend reversal.

Price action looks tempting, but dig deeper: thin liquidity, shaky tokenomics, and a market that rewards hopium over fundamentals. Classic crypto.

Proceed with caution—unless you enjoy buying the top just to HODL bags for the next ’narrative cycle.’

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.