“Ethereum Name Service May Still Be Undervalued,” Trader Says
Key facts:
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The approval of ether (ETH) ETFs greatly benefited this Ethereum token.
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Despite the optimism of some traders, the market shows signs of overbought.
Last week, after many days of uncertainty and speculation, spot ether (ETH) ETFs were finally approved in the United States. This is the native cryptocurrency of the Ethereum network.
With the approval of these financial instruments, The prices of many tokens that “inhabit” the Ethereum network skyrocketed. Digital assets such as PEPE, UNI or LDO had significant price increases of more than 40% in the last 7 days.
A token whose weekly rise was exceptional was Ethereum Name Service (ENS), which is the governance currency of the eponymous platform. This is a protocol that allows the traditional hexagesimal addresses of the Ethereum network to be replaced with an easy-to-remember name. For example, the address of Ethereum creator Vitalik Buterin is 0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045. But, anyone can send it by simply writing the vitalik.eth address in a wallet.
The functionality of the ENS token is that its holders can vote on various decisions that have to do with the operation of the protocol. Furthermore, because it is a token subject to supply and demand on exchanges, it has a volatile price.
The following graph, provided by TradingView, shows How the price of ENS has changed over the last week:
Although the increase has been more than 70% in just one week, there are those who remain optimistic and think that ENS could continue its upward path. This has been said, for example, by the trader and market analyst who identifies himself on social networks as DeFi Peter.
This market operator says that he really likes ENS “from here.”
«Yes, ENS is already up over 80% since the Ethereum ETF. But, with a market cap of $800 million, I think it’s still very undervalued. Every drop we have seen since the announcement has been bought. The sellers are still nowhere to be found.”
DeFi Peter, trader and market analyst.
Given so much optimism, something to keep in mind is that There has not been any event in recent days that particularly encourages the rise of ENS. That is to say, there have been no major developments in the Ethereum Name Service protocol to justify the rise of its governance token.
It can be thought that the fact of being a token of the Ethereum network and also having the “Ethereum” within its name are factors that drive ENS. Such considerations should be considered, since the rise may not be sustained.
From a technical analysis point of view, the RSI (relative strength index) indicator shows that the token is at overbought levels. This can be interpreted as the rise being too rapid and, therefore, a correction would be foreseeable.
Also, The trend indicator known as “Supertrend” shows an upward trend dating back 8 days. Taking this into account, it would not be strange for ENS to have a drop in the next few hours or days.
Lastly, something to consider is that this is an inflationary token. According to data from CoinMarketCap, More than half of ENS’s currency still needs to be issued, which may stimulate price declines in the long term..
In any case, the analysis of financial markets is not an exact science and ENS could continue to rise if the market decides so (that is, if supply exceeds demand). Therefore, faced with an uncertain future It is important that every investor conduct exhaustive research and take appropriate risk management measures.
