Ethena Price Forecast: ENA bullish case tested as Binance’s YZi Labs deepens holdings
- Ethena extends 24% decline from recent high, testing the 50-day EMA as downside risks escalate.
- Binance’s YZi Labs increases its holdings in Ethena Labs and extends strategic support.
- YZi Labs commits to helping Ethena in driving USDe adoption across CEXs and DeFi while expanding stablecoin utilities.
Ethena (ENA) ends the week on the back foot, falling to an intraday low of $0.6546 on Friday. The native token of the protocol behind the USDe stablecoin faces growing downside risks amid a weakening technical structure and an increase in volatility across the cryptocurrency market ahead of the weekend.
YZi Labs deepens holdings in Ethena
YZi Labs, formerly Binance Labs, announced its latest move on Friday, increasing its holdings in Ethena Labs, the company behind crypto token ENA and USDe, the third-largest USD-denominated stablecoin.
YZi Labs stated that the decision to increase exposure underscores its “mission to support open, scalable digital dollar infrastructures that can serve as a backbone of efficiency and liquidity for the entire financial ecosystem.”
The announcement comes on the backdrop of Ethena’s push to expand its presence in the crypto market, particularly on BNB Chain. Ethena is doubling down on building new money markets and protocol integrations through strategic ecosystem partnerships.
YZi Labs believes that its support will help drive USDe’s adoption across Centralized Exchanges (CEXs) and the Decentralized Finance (DeFi) ecosystems. Additionally, YZi Labs’s support could boost Ethena’s stablecoin utilities and “advance USDtb – a fiat-backed stablecoin pursuing GENIUS compliance.”
“We’re excited to continue backing the Ethena team in a meaningful way and look forward to seeing Ethena build the on-chain dollars that weather the test of time and make a lasting impact,” Dana Hou, an investment partner at YZi Labs, stated.
USDe is the third-largest stablecoin, with a market capitalization of $14 billion, while ENA is the 42nd largest cryptocurrency, valued at $4.6 billion.
Technical outlook: ENA risks extending decline
Ethena delicately holds above the 50-day Exponential Moving Average (EMA) at $0.6664 at the time of writing on Friday. The path of least resistance leans downward, underpinned by various technical indicators.
A sell signal from the Moving Average Convergence Divergence (MACD) has been sustained since Monday, prompting investors to reduce their exposure and contributing to the mounting overhead pressure.
The Relative Strength Index (RSI), which has steadily declined from highly overbought conditions at 74 to 44 on August 12, coincides with the MACD sell signal, amplifying the fading bullish momentum.
ENA/USDT daily chart
Traders will look out for ENA’s behaviour around the 50-day EMA short-term support at $0.6664. If the downtrend is broken, the 100-day EMA at $0.5851 will come within reach, with a further price drop likely to test the 200-day EMA support at $0.5332.
Still, traders should temper their bearish expectations, considering the 50-day EMA, which could hold as support, paving the way for an immediate rebound toward the range high of $0.8738.
Open Interest, funding rate FAQs
Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.
Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.
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