Key Takeaways
ENS has fallen since its yearly high in March, but regained its footing on April 12, beginning an upward movement that caused a breakout from a horizontal resistance area. The ENS price has sustained the increase and is validating the area as support.
Since there is no more resistance until the yearly high, it is possible the next upward movement is the one that causes a breakout. Will this happen, and how long will ENS increase afterward if it does?
ENS v2 is the next generation of Ethereum Name Service. ENS Labs announced the proposal on May 28, aiming to extend ENS to a Layer-2 network. The upgrade is important since it will reduce gas costs, provide faster transactions, and improve interoperability.
The reason for the proposed migration is the Ethereum Dencun Upgrade, which made transactions on Layer-2s significantly cheaper. ENS has not yet selected which Layer-2 network it will migrate to. It is possible that ENS will create a custom Layer-2 if it does not find the capabilities of the existing ones to its liking.
The selection criteria consist of three requirements, them being EVM compatibility, censorship resistance and being open-source. The other criteria used for ranking will be finality times, security and the performance of the Layer-2 as measured by the transaction output, confirmation times and gas costs.
In transaction throughput , Base leads with 5.16 MetaSwap gas per second, while Arbitrum is in second place at 4.4 million. The rankings are reversed in transaction counts , where Arbitrum is first with over 2 million transactions per day while Base is second at 1.9 million.
Arbitrum also leads the Total Value Locked (TVL) race , which can be seen as a measure of security. Arbitrum is first with $19 billion TVL, followed by Optimism and Base, at $7.8 and $6.9 billion, respectively.
Finally, average transaction costs show that Arbitrum has the lowest costs at $0.01. zkSync and Linea are in second and third places, respectively, while Base is fourth at $0.08, with transactions costs eight times higher than Arbitrum.
So, judging by these metrics, it seems that Arbitrum could be the most suitable Layer-2 for the migration. ENS has requested $4 million USDC from the ENS DAO to complete the migration.
The ENS price has increased alongside an ascending support trend line since October 2023. The price bounced at this trend line several times, most recently in May 2024.
The upward trend accelerated next week, leading to a high of $28.57. This was just slightly below the yearly high of $30.58, reached in March 2024.
At the time, ENS had seemingly broken out from the $24 horizontal resistance area. However, the breakout proved to be a deviation (red circle) since the price fell below it shortly afterward.
The ongoing breakout has a better chance of being successful because of the indicator readings. During the breakout, the MACD made a bullish cross (green icon) and the RSI increased above 50 (green circle), both signs of a bullish trend.
If the upward trend resumes, the next horizontal resistance is at $41.
The wave count from the daily time frame price chart shows that ENS has completed a five-wave upward movement and an A-B-C correction afterward (black). This entire structure was completed in 308 days. Then, the ENS price began another five-wave increase (white).
If both increases have the same length, ENS will reach a high of $34. If the second one extends to 1.61 times the length of the first, ENS will reach a high of $48. This will be closer to the previously outlined horizontal resistance area, so there is confluence in it being the correct target.
On the other hand, falling below the wave one high (red) at $17.50 will invalidate the bullish count. This is because Elliott Wave rules state that wave four cannot go in wave one territory.
In this case, ENS could even break down below the long-term ascending support trend line and decrease to $10.
The ENS price broke out from the final resistance area before its all-time high. Indicator readings and the wave count support the continuing of the increase. ENS news are also positive after the announcement of ENS v2. So, it is likely the price will reach a new all-time high soon, increasing to at least $34 and possibly $48.