As ENA Bears Strengthen Their Hold, Recovery Is Conditional On…
The past 24 hours witnessed a 6.5% decline in Ethena [ENA] with nearly half of its daily trading volume evaporating. Despite some buying activity on the 3rd of February, the significant reduction in volume signaled a lack of market confidence.
The bearish indications extend further. The impending token unlocks in the upcoming months are expected to exacerbate the existing selling pressure on ENA. With close to 8% of ENA’s total supply still locked, the situation appeared unfavorable for investors.
Despite recent volatility, the synthetic stablecoin of ENA, USDe, managed to retain its peg and propel its market cap past $6 billion—providing a positive outlook for the entire protocol.
Analyzing Ethena’s Price Movements…
The market’s trajectory has been predominantly bearish, characterized by successive lower highs and lower lows over the past three weeks. Bulls may find solace at the 61.8% and 78.6% Fibonacci retracement levels.
The A/D indicator has witnessed a persistent decline since December. The lack of consistent buying pressure underscored the absence of bullish conviction, helping elucidate ENA’s vulnerability during the recent liquidation event.
While certain altcoins and Bitcoin [BTC] could anticipate a rebound post the dissipation of market uncertainties, ENA’s recovery prospects might be hindered by the upcoming token unlocks.
However, traders need not be disheartened. The $0.5 and $0.437 levels hold significance as the subsequent support levels, with the former representing a bullish order block from November that kickstarted the rally.
Surpassing the recent lower high at $0.678 could signal a bullish shift in the market structure on the daily chart. Additionally, the H4 chart indicated that the $0.68 region serves as a crucial short-term resistance level.
Conversely, a breach below $0.5 could create an opportunity for short-selling and a potential test of $0.437.
Disclaimer: The views expressed do not constitute financial, investment, trading, or any other form of advice and solely represent the writer’s perspective.