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Ethena (ENA) has recently experienced a notable price decline, trading at $0.715 at press time after dropping 14% in the past 24 hours. This decline marks a continuation of its bearish streak, now at 21% over the past week. Despite the ongoing downtrend, the altcoin’s futures market shows signs of a potential short squeeze, raising questions about its future price action.
The current bearish trend has led to a significant shift in Ethena’s funding rates, now at a striking -42%. This indicates a high demand for short positions, with traders betting on further declines. Interestingly, this negative funding rate suggests that traders holding long positions are being incentivized by exchanges to maintain their positions, potentially signaling the possibility of a bullish reversal.
A short squeeze could occur if ENA’s price experiences an unexpected surge, forcing the closure of numerous short positions. Such a scenario would generate buying pressure, leading to a potential price rally. However, despite this potential, Ethena’s daily chart reveals that the bears remain firmly in control, with the price currently following a descending parallel pattern. At this stage, any further drop below the lower trendline could accelerate the ongoing downtrend.
The Relative Strength Index (RSI) has dropped to 35, its lowest level since early September, underscoring the surge in selling activity. The On-Balance-Volume (OBV) indicator also shows that sellers currently dominate the market, as the negative OBV suggests a lack of buying interest.
For a bullish reversal to materialize, ENA needs to break the resistance at the 0.5 Fibonacci level, around $1.017. A breakout could push the price toward $1.31, though this would require a shift in market sentiment. Additionally, daily active addresses on the Ethena network have dropped to a two-month low, signaling reduced interest in the altcoin, which could further hinder its price recovery.
Also Read: Ethena (ENA) Double Top Formation Raises Concerns After 600% Rally
As the market continues to evaluate ENA’s future, traders are watching closely for any signs of a trend reversal.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
