Ethena (ENA) has made waves recently with a brief price rally, but caution is warranted despite the bullish price action. A closer look at the market structure, on-chain metrics, and long-term holder behavior reveals that there may be underlying risks for those considering buying into the token.

Ethena’s Price Action: A Bullish Breakout

On May 10, 2025, Ethena broke through a key resistance level, signaling a potential shift in its market structure. The breakout from a descending channel raised hopes for a price rally, as ENA breached the previous lower high of $0.35. This move signaled that the token might be poised to climb higher, especially with the broader cryptocurrency market showing positive momentum, driven in part by Bitcoin’s nearing all-time highs.

This breakout was accompanied by a notable increase in trading volume, indicating heightened market interest. Additionally, the On-Balance Volume (OBV) surpassed highs seen in March and April, suggesting that buying pressure was pushing the price up. The Relative Strength Index (RSI) also showed bullish momentum, with no signs of a bearish divergence, further fueling the optimism that Ethena might see continued gains.

A Deeper Look at On-Chain Metrics: Warning Signs Emerge

Despite the bullish price movement, a closer examination of Ethena’s on-chain data reveals troubling signs. The number of daily active addresses for ENA has remained impressive over the past three weeks, with the highest single-day activity on May 9, which was the largest since February 6. However, the demand for Ethena does not appear to be widespread across the network.

The mean coin age (MCA) has been trending downward since mid-February, with occasional spikes. A rising MCA generally indicates network-wide accumulation, but the current low values compared to December and January suggest that the token may be nearing the end of its distribution phase. While there was a slight bounce in the MCA in May, this alone does not signify a solid accumulation phase.

Furthermore, the Market-Value-to-Realized-Value (MVRV) ratio for Ethena shows that holders with a 180-day investment horizon are sitting on a mild loss of 14.5%. This points to a situation where many investors who bought ETH at higher prices are now facing losses, which could lead to selling pressure in the near future.

Volatility and Overvaluation Concerns

Another key red flag comes from the Network Value to Transactions (NVT) ratio, which has been elevated at certain points over the past few months. A high NVT ratio typically indicates that the market cap is outpacing the volume of on-chain transactions, a potential sign of an overvalued asset. While Ethena’s price may appear to be trending upward, the disconnect between transaction volume and market cap suggests that the token could be overpriced relative to its actual network activity.

Conclusion: A Cautious Outlook for Ethena Buyers

Despite the recent rally in Ethena’s price, buyers should be cautious about entering the market. The token’s impressive price action and volume spikes might be short-lived, with overvaluation signals and a steady decline in long-term holder supply suggesting that further gains could be limited. While Ethena’s recent breakout might appear promising, its on-chain metrics and technical indicators hint that the token may be nearing the tail end of its current cycle.

For long-term investors, Ethena may not present an ideal buying opportunity at this stage. While the price could continue to rise in the short term, the underlying distribution phase, coupled with an overvalued asset and signs of volatility, indicates potential risks. Buyers should consider these factors carefully before making a move.