Ethena [ENA] faces potential loss of recent gains – Here’s why

Ethena Token [ENA] recently surpassed the $1 threshold, a level it had not touched since June 2024, but struggled to maintain its position and has now dipped below it.

The current downturn stands at 6.26%, diminishing ENA’s weekly increase to 12.85%. Market sentiment indicators hint at the possibility of further decline.

Breaking Out of the Upward Channel: A Negative Development

ENA recently broke out of an ascending channel as market sentiment shifted towards bearish, leading to more selling than buying activities.

An ascending channel forms when the price moves within an established upward range but eventually breaches the lower boundary, often retracing back to the channel’s initial point.

In the case of ENA, the decline could potentially halt around the $0.8888 level, presenting an opportunity to reassess for a potential rebound or a continuation of the downward trend.

Should the decline persist, focus will shift to two significant support levels: $0.6852 and $0.5826. A drop to either of these thresholds would eliminate more than half of the gains ENA had attained during its climb to $1.477.

Further Declines in Store for ENA?

ENA might be on the verge of experiencing additional declines as indicated by the formation of a “death cross” on the Moving Average Convergence Divergence (MACD) indicator.

MACD serves as a trend-monitoring momentum tool that traces the correlation between two moving averages of an asset’s price.

A death cross manifests when the short-term moving average (blue MACD line) crosses below the long-term moving average (orange signal line), indicating a potential bearish momentum in the market.

Adding to the pessimistic outlook, the Relative Strength Index (RSI) has fallen below the neutral 50 threshold and presently resides at 44.58. This suggests that market bears are offloading ENA in favor of alternative cryptocurrencies.

Should these patterns persist, it is probable that ENA’s price will further decline below its present value.

Influx of Sellers into the Market

At present, there are more sellers (short positions) than buyers (long positions) in the market, as evidenced by the long-to-short ratio of 0.8847.

When this ratio drops below 1—similar to the current state of ENA—it often signals an imminent price decrease for the asset.

This trend becomes apparent in the recent market setbacks. Over the last 24 hours, long traders collectively suffered losses of around $1.19 million, while short traders faced a smaller loss of $95,400, according to Coinglass.

Given the reduced losses on the short side, it appears that the market is favoring sellers, implying that ENA is likely to prolong its downward trajectory.