Here’s why the crashing Ethena price may rebound soon

The price of Ethena (ENA) has experienced a significant crash, falling by 57% from its peak in December, reflecting broader trends in the altcoin market. Notably, Ethereum has also seen a 32% drop, and Cardano has dropped by 45%, highlighting the widespread weakness in the sector.

Despite the ongoing price decline, Ethena’s network performance remains strong. One of the standout metrics is the total value locked (TVL) in the network, particularly in its stablecoin, USDe, which has reached over $6.12 billion, nearing its all-time high of $6.2 billion. USDe now stands as the fourth-largest stablecoin in the crypto industry, with a market cap behind only Tether, USD Coin, and USDS. Moreover, its 427,000 holders enjoy an annual return of around 10%, derived from arbitrage opportunities within the network.

Technical Analysis Suggests a Possible Rebound

On the daily chart, Ethena’s price action has formed a double-top pattern at $1.3065 between December and January. This pattern, along with a neckline at $0.8470, explains the sharp decline of nearly 60% from its peak. Ethena has also dropped below the 50-day moving average, signaling that the bears are in control for now. However, there are positive signals that suggest a potential rebound.

Ethena appears to be forming a falling wedge pattern, with the upper boundary connecting the highs since January and the lower boundary linking the lows since December. As the two trendlines approach convergence, a bullish breakout could be on the horizon. A breakout from this pattern could propel Ethena’s price higher, possibly retesting the double-top level at $1.3062, which would represent a 130% increase from the current price.

Additionally, technical indicators, such as the Relative Strength Index (RSI), are showing signs of oversold conditions, with the RSI recently dropping to 35, approaching the key oversold threshold of 30. Historically, assets tend to experience a rebound once they reach oversold conditions.

However, for the bullish outlook to remain intact, Ethena must maintain its support level at $0.4425, which represents the lower boundary of the wedge. A drop below this level would invalidate the bullish scenario and could signal further downside risk.

In summary, while Ethena’s price has taken a significant hit, its network fundamentals remain strong, and technical indicators suggest the potential for a price rebound, provided key support levels hold.