ENS price booms 40% in 7 days: Do predictions foretell a correction?
- ENS’ price has increased by over 40% in the last seven days.
- There was a possibility of decline as the ETF hype declined.
The Ethereum Name Service [ENS] token has experienced a significant rally, skyrocketing over 40% in the last seven days, according to data from CoinMarketCap.
The value uptick follows Ethereum’s [ETH] own impressive price hike, fueled by the recent approval of the long-awaited Bitcoin ETF.
At press time, ENS exchanged hands at $26.21. According to data from CoinMarketCap, the altcoin’s value has risen by 40.27% in the last week to earn its spot as the crypto asset with the most gains in the last seven days.
Demand for ENS surges
Impacted by the general rally in the altcoin market this past week, ENS’ price rise has also been caused by real demand for the token, on-chain data from Santiment revealed.
According to the data provider, ENS’ daily active address count observed on a seven-day moving average has increased by 47% in the last week.
Likewise, the daily count of new addresses created to trade the altcoin has surged by 49% during the same period.
Source: Santiment
The positions of key momentum indicators observed on a daily chart confirmed the high demand for ENS. For example, its Relative Strength Index (RSI) was 82.02, while its Money Flow Index (MFI) returned a value of 82.19.
At these values, these indicators showed that ENS accumulation significantly exceeded sell-offs among daily traders.
Showing the steady inflow of liquidity into the ENS market, its Chaikin Money Flow (CMF) maintained an uptrend and rested above the zero line at 0.27 at press time.
A CMF value of 0.27 is a sign of strength in the market. This, and the high volume of ENS trades executed in the past week, has strengthened the bullish sentiment in the market.
Further, ENS’ Awesome Oscillator has returned mostly green upward-facing bars since the year began. This indicator is often used to track the market’s momentum. When it returns upward green bars, it suggests bullish market conditions.
Many traders interpret it as a signal to go long, as they expect the asset’s price to rise further.
Confirming the strength of the bullish trend, ENS’ Aroon Up Line (orange) was spotted at 100% at press time.
This indicator is used to identify trend strength and potential trend reversal points in a crypto asset’s price movement.
When the Aroon Up line is close to 100, it indicates that the uptrend is strong and that the most recent high was reached relatively recently.
Source: ENS/USDT on TradingView
This is where the problem lies
While the indicators assessed above confirmed ENS’s bullish cycle, others hint at the possibility of a price correction.
The token’s 30-day MVRV ratio was 59.32% as of the time of this writing. An MVRV ratio of 59% means that, on average, holders who bought the coin in the past month have seen their holdings increase in value by 59%.
As the hype around the ETF starts to wane, traders may begin to lock in these profits, putting downward pressure on ENS’ price.
Source: Santiment
Also, ENS’ RSI and MFI rested at overbought highs at press time. These levels are often marked by buyers’ exhaustion as the bulls struggle to sustain further price growth.
With more than half of the investors that bought ENS in the last month already in profit, they may be incentivized to sell at this level.
An assessment of ENS’ exchange activity revealed that profit-taking activity has already commenced. According to data from Santiment, since the 10th of January, there has been a rise in the alt’s supply on exchanges. It has since risen by 5%.
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At press time, 8.24 million ENS tokens sat on crypto exchanges. Conversely, its supply outside exchanges has dropped by 0.43% in the past three days.
Source: Santiment
The hike in ENS’ supply on exchanges shows that holders have started to sell their tokens. As bullish sentiment plummets, profit-taking activity will gain momentum, forcing ENS’ value to new lows.
