Ethena [ENA] is among the most widely used DeFi protocols, providing liquidity through its USDe stablecoin. Over the past 24 hours, the altcoin has grown by over 7%, that is, from $0.18 to $0.20.
Its daily trading volume is in excess of $405 million. However, ENA has started to face rejection, despite some analysts projecting an upside potential.
Understanding Ethena’s fundamentals
Recently, Lark Davies announced he had bought a bag of Ethena tokens after conducting detailed research. The analyst cited that Ethena had generated over $1 billion in real fees and not emissions or printed tokens.
This was actual revenue, and almost none of that had gone to the people holding ENA tokens. But that was about to change, as these fees would fund a buyback mechanism.
Lark Davies argues that it could be the best bet on stablecoins and potentially better than Circle [CRCL] due to the upcoming buyback program.
Additionally, its Total Value Locked [TVL] has grown $1.32 billion since early August. Its most recent daily fees were over $4 million.
Moreover, Janus Henderson Investors, which took a position in ENA in June, plans to use its staked USDe for cash management. This follows Ethena’s integration of Janus Henderson’s AAA CLO strategy.
These are AAA-rated floating-rate collateralized loan obligation tranches, tokenized via Centrifuge [CFG], and are eligible backing assets for USDe. This move shows traditional finance (TradFi) is catching ENA bids.
Is ENA’s correction about to end?
While these are bullish signs, Ethena has been in a downtrend due to long liquidations and whale sales. However, that could come to an end soon as the price action starts to shift.
Currently, ENA is bouncing off an Optimal Trade Entry (OTE) that lies between the 0.618 and 0.786 Fibonacci Retracement levels. The altcoin has reclaimed $0.20 but needs to flip the $0.215 level into support.
This would mean the price entering the premium zone is now at a discount. The MACD has turned bullish, suggesting it’s taking into account the looming fundamental changes.
Furthermore, the CVD shows that over 23.76 million ENA were bought at press time. In case the uptrend stays alive, then $0.30 becomes the next target, while failure would cause a full retracement to $0.135.
Final Summary
- Some analysts project a bullish trajectory for Ethena due to an upcoming buyback mechanism funded by fees.
- ENA was bouncing off $0.18 but needed to clear $0.215 as resistance to confirm a bullish trend shift.
Be the first to comment