Enjin Coin Technical Analysis: Has This Altcoin Lost its Lustre or Will it Rise Again?

Enjin Coin (ENJ) was created with the objective of leveraging the revolutionary blockchain technology to make finance more global, virtual and advanced and to serve in the progress of humankind at large. With the promise of giving users the ability to simply manage their NFT and crypto portfolios, it became incredibly popular during the 2021 rally and still remains a popular favourite amongst crypto investors.

Founded in 2009, the company currently has a total of 12.4 million worth of its ENJ tokens locked in assets. As of 29 May, it was reported that the ENJ token was among the top 10 purchased tokens among the 2,000 biggest ETH whales in the last 24 hours.

ENJIN COIN (ENJ): TECHNICAL OVERVIEW

Source: Tradingview

From a technical standpoint, much like all other coins in the market, this one too has been bettered heavily in the bear run that began at the start of this year. However, a broader look shows some positive action might be underway behind the scenes. As demarcated by the blue trendlines, ENJ prices have formed a falling wedge pattern on the charts. A falling wedge pattern is seen as a bullish signal as it reflects that a sliding price is starting to lose momentum, and that buyers are starting to move in to slow down the fall.

Along with that, towards the end of June, ENJ prices managed to breakout of the falling wedge patter and is now very close to defeating the 50-day moving average. If it is able to achieve that, it will have overturned its short-term bearishness and can try breaching the 200-day moving average to flip the long-term downtrend.

Even the Relative Strength Index is positioned quite favourably for a further upward move in the token too at current price levels. So some broader market optimism will go a long way to ensure this token’s recovery to reach at least $1-1.5 by the end of the year.

Check out latest ENJ Price, Charts & Data.

WHAT DO ON-CHAIN METRICS HAVE TO SAY?

On-chain metrics for this particular coin however don’t seem very optimistic just yet. As mentioned above, technically the token is  well positioned for a recovery but it will surely need the support of strong fundamentals to mount a strong rally from current levels.

One of the metrics that point to heavy weakness on the blockchain is the decline in the New Addresses count. According to Glassnode, New Addresses Count is the number of unique addresses that appeared for the first time in a transaction of the native coin in the network.

New Addresses | Source: Glassnode

So basically looking at the 7-day moving average line of the New Addresses Count, you can clearly see that it has been on the slide down ever since the beginning of the year, despite a few spikes here and there in the middle. But one thing to note is that, there is some bottoming out that is playing out on this chart. So a further recovery in prices may trigger some improvement here too as more users begin to join the network.

HOWEVER, IS ENJIN COIN A GOOD INVESTMENT NOW?

Well, that is a tough question. It is an undeniable fact that Enjin is a project that is highly successful in its space and is slated for great things. However the broader market trends have fallen heavy on this coin too, thanks to its high correlation with Bitcoin prices (of around 0.72 as of today).

So due to that, and the falling prices – current price levels might not be the best place to go long on the coin. Why do I say so? Well, ENJ’s Sharpe Ratio is currently hovering around -1.0.

Sharpe Ratio | Source: Messari.io

The Sharpe ratio was developed by Nobel laureate William F. Sharpe and is used to help investors understand the return of an investment compared to its risk. The ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk. Volatility is a measure of the price fluctuations of an asset or portfolio.

So now, in Enjin Coin’s case, the Sharpe Ratio is barely holding on to the lower end of the spectrum.

CONCLUSION

In conclusion, Enjin Coin is a project with solid ideas and use-cases however, it has become a victim to poor market conditions and sentiments. So this is a coin that an investor should definitely be on the look out for but should be very careful before investing at current price levels. If sentiments turn sour once again, this coin may suffer the brunt of the bearish action.