PancakeSwap (CAKE) Rips 40% to 3-Month High, Yet On-Chain Data Reveals It’s Undervalued

Key Takeaways

• PancakeSwap’s token hit a 3-month high of $2.80, fueled by a bullish ascending triangle and rising trading volume.
• The CMF and Supertrend both flash green, signaling buyers are in control and eyeing a breakout above $3.25.
• With a MVRV ratio of 28%, CAKE may still be undervalued, hinting at further gains before hitting historical tops.
• The ADX reading of 27.55 suggests a strong uptrend that could push CAKE’s price past $3.77 and toward $4.

PancakeSwap’s native token, CAKE, has jumped 40% over the past month, climbing to $2.80, its highest level since February.

The last time CAKE touched that range, it quickly dropped below $1.50 within weeks. But this latest surge may have more staying power.

On-chain data suggests the token is still trading below its fair value, hinting that the rally might not be over just yet.

CAKE Bulls Take It to February Highs

Based on the daily CAKE/USD chart, the altcoin retested $2.80 after consistently hitting higher lows. Following this move, CAKE has formed an ascending triangle.

An ascending triangle is a bullish continuation pattern. It forms when price consolidates between a rising trendline (higher lows) and a horizontal resistance line (equal highs).

As seen in the image below, buyers are gradually gaining strength. Trading volume has also increased, indicating that bulls are ready to push the CAKE token price higher.

If validated, CAKE will likely breach the resistance around $3.25. In addition to that, CCN observed that the Chaikin Money Flow (CMF) reading has risen above the signal line.

This CMF positive validates the bullish thesis, and if sustained, CAKE’s price rally could continue into June.

No Bull Trap Here

From an on-chain perspective, we examined the Market Value to Realized Value (MVRV) ratio to assess whether CAKE’s recent upswing is nearing exhaustion or not.

The MVRV ratio compares the token’s current market value to the average price at which most holders acquired it. When the ratio is low, it suggests there is still room for growth.

But when it’s high, it may indicate that holders are deep in profit and could begin to sell, indicating a potential top.

At the moment, CAKE’s MVRV ratio has risen to 28.03%. However, it does not suggest widespread profit-taking.

Historically, CAKE’s price reaches a local top when the 30-day MVRV ratio is between 40% and 125%. Therefore, if history rhymes with the current outlook, the CAKE token price will likely move closer to $4.

CAKE Price Analysis: Breakout to Continue

Zooming into the daily chart, CAKE shows promising signs of a continued uptrend. The Supertrend indicator, which helps identify potential buy or sell signals, currently has its green line below the token’s price.

Typically, when the red line of the Supertrend is above the price, it acts as a resistance. However, in this case, the reversed setup implies bullish momentum and the potential to break the immediate resistance at $3.26.

Further strengthening this outlook is the Average Directional Index (ADX), which has broken above its previous downtrend and now sits at 27.55. This value indicates a strong trend, as readings above 25 confirm a solid directional movement.

If the momentum holds, CAKE could breach the $3.77 level, which is aligned with the 0.236 Fibonacci retracement. Once this level is cleared, a move toward $4 becomes increasingly likely.

However, this bullish scenario could be invalidated if the directional strength begins to weaken. Should that happen, CAKE’s price may slide back below $2, especially if broader market conditions turn unfavorable.