Ethena price has crashed by 57% from its highest level in December as sentiment in the crypto industry weakened.
Ethena’s (ENA) decline has mirrored that of most altcoins. For example, Ethereum has dropped by over 32% from its December peak, while Cardano has fallen by 45%.
Despite the ongoing token crash, Ethena’s network continues to perform well. The total value locked in the network, or the USDe stablecoin market cap, has surged to over $6.12 billion, nearing its all-time high of $6.2 billion.
USDe has now become the fourth-largest stablecoin in the industry, trailing only Tether, USD Coin, and USDS. Its 427,000 holders earn an annual return of approximately 10%, generated from arbitrage opportunities within the network.
Ethena price technicals point to a comeback
The daily chart shows that ENA formed a double-top pattern at $1.3065 between December and January. This pattern, characterized by two peaks and a neckline, at $0.8470 in this case, explains why ENA has plunged nearly 60% from its highest level this year.
Ethena has also dropped below the 50-day moving average, signaling that bears remain in control. However, on the positive side, ENA is slowly forming a falling wedge pattern. The upper boundary of this pattern connects the highest swings since January, while the lower trendline links the lowest points since December.
With the two lines nearing their confluence level, a bullish breakout may be imminent. A strong breakout could push the price higher, potentially retesting the double-top level at $1.3062, around 130% above the current price.
The bullish outlook is further supported by oscillators approaching oversold levels. The Relative Strength Index (RSI) has dropped to 35 and is approaching the key oversold threshold of 30.
Historically, assets tend to rebound upon reaching oversold conditions. However, a drop below the key support at $0.4425, represnting the lower boundary of the wedge, would invalidate this bullish scenario.
