Home Altcoins News Ethena Price Struggles: Can a Short Squeeze Drives a Rebound for ENA

Ethena Price Struggles: Can a Short Squeeze Drives a Rebound for ENA

Ethena Price Struggles

Ethena (ENA) has faced significant price declines recently, leaving many investors wondering if the altcoin can turn things around. With a drop of 14% in just 24 hours and a continued bearish trend, ENA has been caught in a downward spiral. However, there might be a surprising twist on the horizon that could lead to a sudden rebound. Here’s why Ethena’s -42% funding rate could signal a potential price recovery.

What’s Behind the Drop in ENA’s Price?

At the time of writing, ENA was trading at $0.715, marking a sharp decline in value. Over the past week, the altcoin has lost 21% of its worth, continuing a series of price drops that have left many wondering if there’s a way out of the current downtrend.

The futures market, however, is showing signs of a unique situation. ENA’s funding rate has plummeted to -42%. This indicates that there is a high demand for short positions—traders betting that ENA’s price will continue to fall. While this signals a bearish market sentiment, it also creates a potential opportunity for a price rebound.

The Role of Short Positions: Could a Short Squeeze Be Coming?

A funding rate of -42% might sound worrying, but it could actually be a sign that a short squeeze is in the works. A short squeeze occurs when traders who have bet against an asset are forced to buy it back as its price rises. This sudden buying activity can lead to a sharp increase in price, sometimes triggering a significant rally.

If ENA’s price begins to rise unexpectedly, those holding short positions might rush to cover their bets, causing a ripple effect of buying that could push the price higher. This scenario could offer a surprising twist in the market, shifting the sentiment from bearish to bullish.

Technical Indicators: Bears Still in Control

Despite the potential for a short squeeze, the technical analysis on ENA’s daily chart paints a less optimistic picture. ENA is currently trading within a descending parallel pattern, which typically indicates a bearish trend. The price has already breached the middle of this pattern, and if it drops below the lower trendline, the downtrend could intensify.

One key indicator signaling the strength of the bearish trend is the Relative Strength Index (RSI), which has fallen to 35—its lowest point since early September. This suggests that selling pressure has outweighed buying interest, contributing to the continued decline in ENA’s price.

Additionally, the On-Balance-Volume (OBV) indicator shows that there is little buying activity, with most traders choosing to sell rather than buy the dip. This further reinforces the idea that ENA is still in a downtrend, and the bears remain in control.

Could Network Activity Help Fuel a Rebound?

One factor that could turn the tide for ENA is an increase in network activity. As of now, daily active addresses on the Ethena network have dropped to a two-month low, signaling a lack of interest in the altcoin. According to data from Santiment, there were only 1,031 active addresses at the time of writing.

This decline in network activity is concerning, as it suggests that investors are not actively engaging with the Ethena platform. A rebound in ENA’s price would likely require more users to return to the network, which could boost demand and lead to higher prices. Without an uptick in network activity, ENA could continue to struggle.

What Needs to Happen for ENA to Recover?

For ENA to experience a true recovery, a few key things need to happen. First, the price needs to break through resistance at the 0.5 Fibonacci level, which is currently at $1.017. A successful breakout could signal a shift in sentiment, with the potential to drive ENA’s price up to $1.31.

Additionally, a reversal in the bearish trend would require more buyers to enter the market, increasing demand for the token. This could be supported by a resurgence in network activity, as more users engage with the Ethena platform and contribute to the overall growth of the ecosystem.

The Bottom Line: Is a Rebound Likely for ENA?

While Ethena’s current price action is undeniably bearish, there are signs that the market could turn around. The high demand for short positions creates the potential for a short squeeze, which could drive ENA’s price higher. However, the altcoin’s technical indicators and declining network activity suggest that any rebound may be temporary unless significant changes occur.

For now, traders and investors will need to keep a close eye on the funding rate, price movements, and network engagement to determine if ENA can break free from its downtrend and start a new upward journey. As 2025 unfolds, the future of Ethena remains uncertain, but there’s still a chance for a surprising turn of events.

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dan saada

Dan hold a master of finance from the ISEG (France) , Dan is also a Fan of cryptocurrencies and mining. Send a tip to: 0x4C6D67705aF449f0C0102D4C7C693ad4A64926e9

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