Ethena (ENA) Faces Potential 50% Drop to $4.5 at Start of 2025: Analysis

In the previous week, Ethena [ENA] has witnessed a reduction of 11.89% in its market value, with continued losses noted in the last 24 hours as the token experienced another dip of 2.01%.

With the current market setup and prevailing bearish trends, it is anticipated that ENA may encounter further downtrends, potentially establishing new price lows.

Identification of Head and Shoulders Pattern on ENA Chart

Analysis of the 4-hour chart reveals the formation of a head and shoulders pattern on ENA’s chart, indicating a bearish signal. The pattern is almost complete and could be one candlestick away from confirmation.

If this pattern materializes entirely, ENA could enter into another phase of bearish movement. A breach below the support level, also known as the neckline, could trigger a substantial price decline.

The chart suggests the potential for ENA to drop to $0.454, marking a significant 49.10% decrease from its current value of $0.92. In the absence of robust support to counter the selling pressure at this level, the token might face further substantial losses.

Market dynamics have further contributed to the pessimistic outlook, with traders intensifying their selling activities.

Escalation of Selling Pressure in the Derivative Market

The derivative market is witnessing heightened selling pressure, with sellers dominating the trading landscape.

At the present moment, the Funding Rate stands at -0.0019%, firmly positioned in negative territory.

A negative Funding Rate signifies that short traders are paying an extra cost to uphold their positions, reflecting a bearish sentiment prevailing in the market.

If the Funding Rate continues to decrease, ENA’s price might encounter further downward pressure, potentially dropping to $4.5 as indicated in the analysis.

Over the past 24 hours, ENA’s Open Interest has declined by 2.43% to $558.53 million, pointing to a reduction in active positions as traders close trades amidst mounting selling pressure.

This behavior often indicates efforts to evade liquidation and restrict additional losses, signaling diminishing confidence in the market.

The Exchange NetFlow data supports the bearish perspective, showcasing a notable decrease in the volume of ENA tokens exiting exchanges in the last four days.

A continuous decrease in outward token flows implies a growing number of ENA tokens held on exchanges, augmenting the available supply. This surplus could fuel selling pressure, driving the asset’s price further downwards.

Expected Increase in ENA Supply

As per Layergg, 12 million ENA tokens are set to be unlocked and released into the market on January 1st, significantly expanding ENA’s circulating supply.

The additional supply, coupled with the current bearish sentiment, could expedite a price slump if demand fails to stabilize the market.

Given the prevailing market conditions, this scenario increasingly appears likely for ENA.