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This cryptocurrency could skyrocket next week
Ethena (ENA) has been heavily shorted derivatives marketshowing staggering negative funding rates on May 18th cryptocurrency could experience a brief contraction as the market’s opening interest weighs in short positions against the ENA.
In particular, the most relevant indicator for a short squeeze warning on Ethena is its massive negative funding rate. In this regard, Finbold recovered data from CoinGlass showing that ENA short sellers are paying a 268% APR. long position Merchants.
Financing rate heatmap: ENA. Source: CoinGlass/Finbold
Furthermore, Ethena has the 25th largest open interest (OI) among all cryptocurrencies, currently with $194.21 million in open positions. ENA’s OI stands out at 16% of a $1.19 billion market cap, one of the highest OI/MCap ratios.
ENA derivatives market data. Source: CoinGlass/Finbold
Ethena (ENA) short squeeze price target.
At the time of writing, ENA is trading at $0.78, up 10.26% in the last 24 hours. Around-the-clock open interest increased 12.5%, while volume increased 35.48% to $541.55 million traded. Interestingly, $283.67 million of open short positions were established during this period, with a dominance of 50.54%.
In the event of a short squeeze, the token could target two key price zones. First, we are looking at a short-term liquidity pool of between $0.83 and $0.89, with most liquidations at $0.84. The second key level is located at $1.08.
A run towards these price targets could earn Ethena investors a gain of between 7.7% and 38% at the current exchange rate.
However, the long-term fundamentals of Ethena have yet to be revealed as the project has raised significant concerns in the crypto community.
What is Ethena (ENA)?
In summary, Ethena is a protocol built on Ethereum (ET) which has a governance token, ENA. The protocol aims to be the “Internet bond,” providing a synthetic dollar, USDe, and an “Internet-native yield,” as described in its official communications.
Its popularity skyrocketed when Arthur Hayes personally supported the project, followed by massive support from key players. Some skeptics have compared it to Terra’s (MOON) growth and value proposition, culminating in its collapse in 2022.
Therefore, the current short selling interest may be a bearish demonstration of Ethena’s fundamentals rather than short-term speculation. This could prevent a short squeeze from occurring despite all the signs technical indicators.
However, it’s impossible to know whether Ethena will be a huge success or a drastic failure. Investors interacting with ENA and USDe must understand the risks and make informed decisions moving forward.
Disclaimer: The content of this site should not be considered investment advice. Investing is speculative. When you invest, your capital is at risk.