Ethena: Why ENA’s -42% Funding Rate could trigger a rebound

• ENA’s Funding Rates dropped to -42%, highlighting surging demand for short positions.
• An influx in short positions showed a bearish market sentiment, but an unexpected uptrend could lead to forced buying.

Ethena [ENA] was trading at $0.715, at press time, after dropping 14% in 24 hours. The recent decline has extended the altcoin’s bearish streak, which has been 21% in seven days.

This downtrend has created a unique situation in the futures market, with ENA’s Funding Rates declining to -42%. This suggests a high demand for short positions as sellers bet on further declines.

These negative rates further show that traders taking long positions on ENA are being paid by exchanges to maintain their positions, which could precede a bullish reversal.

Source: Coinglass

An influx of short positions in the market, while bearish, could lead to a short squeeze scenario. If ENA makes a sudden reversal and triggers a short liquidation event, the forced closure of these positions leads to buying pressure that causes the price to rally. 

Despite this bullish outlook, ENA’s daily chart suggests that bears remain in control. 

Analyzing Ethena’s descending parallel pattern 

ENA was trading within a descending parallel pattern on its daily chart, an indication of a bearish trend. At the time of writing, ENA had breached the midline of this pattern, with a drop below the lower trendline set to accelerate the downtrend. 

The price decline appears to stem from selling pressure after the Relative Strength Index (RSI) dropped to 35. This RSI is at its lowest level since early September, further highlighting the rapid surge in selling activity.

Source: TradingView

The negative On-Balance-Volume (OBV) indicator also shows that traders are not buying the dip as selling pressure outweighs the buying pressure.

This indicates that ENA is in a strong downtrend that could cause further price declines unless the trend reverses. 

For a bullish reversal to occur, ENA needs to break the resistance level at the 0.5 Fibonacci level ($1.017). A breakout from the upper trendline could stir gains toward $1.31. 

Daily active addresses drop to a two-month low 

Besides a return of buyers, the other factor that could aid an uptrend for ENA is an upsurge in network activity. However, at press time, usage on the network was on a decline, which could exert further downward pressure. 

Source: Santiment

Read Ethena [ENA] Price Prediction 2025-26

According to Santiment, daily active addresses on the Ethena network have dropped to 1,031, the lowest level in two months.

This indicates reduced interest in the altcoin, leading to negative market sentiment.