Ethena (ENA) Price Jumps 57%, Meets Resistance at September Peak

Key Takeaways

• USDe adds SOL to diversify its collateral assets.
• ENA rebounds with a 102% gain, signaling bullish momentum.
• The potential target for ENA wave 3 is set at $0.62.

Ethena (ENA) is expanding the collateral base for its synthetic stablecoin USDe by proposing the inclusion of Solana (SOL).

Meanwhile, ENA has recently shown signs of breaking out from a bearish cycle, indicating the start of a potential bull phase. Let’s explore the key developments and future outlook.

What Drove the Rise? 

Ethena Labs, the developer behind the synthetic stablecoin USDe, has proposed incorporating Solana (SOL) into the mix of assets backing the stablecoin’s treasury.

Unlike traditional stablecoins like USDT or USDC, USDe isn’t backed by fiat at a 1:1 ratio. Instead, it maintains its $1 peg using a combination of collateralized stablecoins and hedged cash-and-carry trades, supported by a reserve fund to manage market risks.

If approved by Ethena’s independent Risk Committee, SOL will be gradually added as collateral, with an initial allocation goal of $100-200 million in SOL positions.

This would account for 5-10% of SOL’s open interest, aligning with Ethena’s strategy, as it already holds 3% of BTC’s global open interest and 9% of ETH’s. The proposal also includes the potential integration of liquid staking tokens (LSTs) like BNSOL and bbSOL, similar to its current approach with ETH LSTs, which make up a third of its ETH holdings.

In a related move, Ethena recently allocated $46 million from USDe’s reserve fund to tokenized real-world assets, investing in products like BlackRock’s BUIDL and Mountain’s USDM. This reflects a broader DeFi trend of generating yield through asset-backed tokens.

ENA Price Analysis 

The price entered a bearish cycle from its all-time high of $1.50 on April 10. We saw a continuous downtrend, forming a descending channel leading to a low of $0.20 on Sept. 6, an 87% decrease.

It was likely a WXYXZ correction, as we can spot a five-wave structure to the downside. From Sept. 6, ENA consolidated until Sept. 17, when a solid upward move brought the price above the descending resistance, signaling a new bull phase.

On Sept. 30, it reached a high of $0.42, increasing by 102% from its low on Sept. 17.

The subsequent downturn kept a higher low of $0.25 on Oct. 10, a second strong signal of the starting bull phase. 

We saw ENA returning to its September high today, and a breakout to the upside will provide the third and strongest confirmation of the starting bull phase.

Technical indicators Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) confirm the upward momentum, so we can anticipate more upside.

ENA Price Prediction 

Zooming into the hourly chart, we can see that the rise from Sept. 6 and a downturn to a higher low on Oct. 10 could be counted as the first two sub-waves of the next five-wave impulse to the upside. 

If true, ENA is now developing wave 3, which should significantly surpass its prior high. Projecting the target with the Fibonacci extension tool, the price can reach a target of $0.62 at the 1.618 level.

That should be its wave three, followed by a sideways correction at wave 4 before a final high of $0.70.

Finally, if the price action develops a five-wave pattern, there will be undeniable evidence that ENA is in the new bull phase.

Read more: Ethena Price Prediction 2024: ENA Price Analysis