As of the latest update, Ethena [ENA] was priced at $0.715, witnessing a 14% decline in a 24-hour period. This recent downturn has prolonged the bearish momentum of the altcoin, resulting in a 21% decrease over the past week.
The current downward trajectory has given rise to an interesting scenario in the futures market, marked by ENA’s Funding Rates dropping to -42%. This indicates a significant interest in short positions, with traders anticipating further price drops.
The negative funding rates imply that those holding long positions on ENA are actually receiving payments from exchanges to keep their positions open, hinting at a potential bullish reversal.
Although an abundance of short positions typically indicates a bearish market sentiment, it could potentially trigger a short squeeze scenario. In the event of a sudden price reversal by ENA leading to short liquidation, the subsequent buying pressure could drive the price upwards.
Despite the optimistic outlook, the daily chart for ENA suggests that sellers are currently dominating the market trend.
Examining Ethena’s Descending Parallel Pattern
ENA’s daily chart reveals a descending parallel pattern, signaling a bearish trend. At the time of writing, ENA had breached the midline of this pattern, and a further drop below the lower trendline could accelerate the downtrend.
The downward movement is attributed to intensified selling pressure following a decline in the Relative Strength Index (RSI) to 35. This marks the lowest RSI level since early September, highlighting the rapid increase in selling activity.
The negative value of the On-Balance-Volume (OBV) indicator indicates that selling pressure outweighs buying pressure, reinforcing the existing downtrend for ENA.
Unless there is a reversal in the current trend, ENA could continue to experience price declines moving forward.
To initiate a bullish reversal, ENA must break through the resistance level at the 0.5 Fibonacci level ($1.017), potentially leading to a price surge towards $1.31 upon breaching the upper trendline.
Decrease in Daily Active Addresses to Lowest Level in Two Months
In addition to an influx of buyers, an increase in network activity is crucial for ENA’s upward momentum. However, network usage has been declining recently, intensifying downward pressure on the coin.
Recent data from Santiment indicates that daily active addresses on the Ethena network have dwindled to 1,031, marking the lowest figure recorded in the past two months.
This decline in active addresses reflects waning interest in the altcoin, contributing to an overall negative sentiment in the market.