ENA rallies 12% amid Ethena Lab’s accumulation: Is $0.50 next?

Key Takeaways

Is Ethena Labs’ history of buying ENA repeating?

Purchases by the Ethena Labs team have historically led to price surges in ENA, and this could be another unfolding repetition.

Will ENA hit $0.50 as the next target?

The price action was in support of a further uptrend, but liquidity clusters could present some challenge.

Ethena has maintained its flair in the stablecoin market even though there has been competition from other protocols.

The price action of ENA rose by 12% in the past 24 hours, while volume spiked by more than 5 times the price change.

A technical breakout from the consolidation drove the rally immediately after the Ethena team began buying ENA tokens.

Ethena team buys as its reserves grow

As per data from OnChain Lens, Ethena Labs was buying and withdrawing ENA from centralized exchanges (CEXs). First, they bought more than $28 million worth of 105.35 million ENA.

Also, another 20 million ENA valued at $5.45 million was received from Bybit. This followed a string of additional purchases from the Bybit exchange since the 21st of November.

The Ethena team’s holdings were at $88.67 million, representing massive accumulation. Price surges have historically followed such purchases.

Source: Onchain Lens

These purchases coincided with growth in the USDe Reserve Fund and supply, as well as the protocol’s fees. At the time of writing, the Reserve Fund was at $62.45 million, while cumulative fees were at $600 million.

Source: Dune

The increasing stablecoin reserves meant that there was enough liquidity. Furthermore, the purchases from the team injected capital into the cryptocurrency.

ENA price breaks out: What now?

Ethena price broke out of the month-and-a-half consolidation. ENA surged from $0.2288 to around $0.30, with most of the candles closing green in the 4-hour chart.

The Bull Bear Power (BBP) and RSI highlighted the strength of bulls. The BBP reading was at 0.0396, while the RSI was at 78. The RSI was in the oversold zone, hinting at potential short-term retaliation by the sellers.

Source: TradingView

Interestingly, ENA price was above $0.28, a zone that had three equal highs. Sustained momentum could push the price toward $0.50, which rhymed with the top of the falling wedge pattern.

However, the $0.3534 was challenged due to seller accumulation around this zone. Earlier, this zone initiated the move to lows at $0.2280, where the reversal started following price contraction.

The liquidity heatmap presented a different picture.

Liquidation heatmap hints at a potential drop

The liquidity heatmap showed more capital was located to the downside. The liquidity above $0.30 was very minimal compared to the one below $0.29.

The high liquidation leverage between $0.26 and $0.28 was the highest for the day. Thus, the price of ENA could decline to pick up this liquidity.

This concentration of orders was inside a price range, as seen in the CoinGlass data chart.

Source: CoinGlass

This contradicts the potential of ENA price rising past $0.50. If price followed the highest liquidity clusters, then it was more likely for ENA to decline.