Short squeeze imminent: ENA cryptocurrency poised for explosive growth in the coming week
Ethena (ENA) has become a prime target for short selling in the derivatives market, with extremely high negative funding rates recorded on May 18. This signifies a potential short squeeze as the overall open interest in the market is weighted heavily towards short positions against ENA.
What sets off the short squeeze alert is the significant negative funding rate that Ethena is currently experiencing. Data from CoinGlass reveals that ENA short-sellers are paying a staggering 268% APR to long-position traders.
Additionally, Ethena boasts the 25th largest open interest among all cryptocurrencies, with open positions valued at $194.21 million. Notably, ENA’s open interest stands at 16% of its $1.19 billion market cap, solidifying its position as one of the cryptocurrency market’s most attractive investment opportunities.
As for the current price, ENA is trading at $0.78 with a 10.26% increase in the last 24 hours. The open interest within the same period has seen a 12.5% increase, while trading volume has surged by 35.48% to $541.55 million. Of this total, $283.67 million comprises newly opened short positions, further indicating market dominance.
Should a short squeeze occur, there are two key price zones that ENA could target. The first lies between $0.83 and $0.89, with the most considerable liquidations occurring at $0.84. The second significant level is at $1.08.
A successful run towards these price targets could potentially yield investors gains ranging from 7.7% to 38% based on the current exchange rate.
However, it is crucial to note that Ethena’s long-term prospects remain uncertain, as the project has raised some concerns within the crypto community.
What is Ethena (ENA)?
Ethena is a protocol built on Ethereum (ETH). The protocol introduces ENA, a governance token, with the aim of becoming “the internet bond.” It provides a synthetic dollar, USDe, and “internet native yield” as outlined in its official communications.
The project gained significant popularity when it received personal support from Arthur Hayes, followed by substantial backing from key industry players. Some skeptics have drawn comparisons between Ethena and Terra (LUNA), which also experienced a surge and subsequent crash in 2022.
As a result, the current short-selling interest could demonstrate bearish sentiment towards Ethena’s underlying fundamentals rather than short-term speculation. This could potentially hinder the occurrence of a short squeeze despite the numerous signals and technical indicators pointing in that direction.
Ultimately, the success or failure of Ethena remains uncertain. Investors considering engagement with ENA and USDe need to carefully assess the risks and make informed decisions moving forward.
Disclaimer: The information provided should not be interpreted as investment advice. Investing in cryptocurrencies carries inherent risks, and capital is always at risk.