Ethena Faces Bearish Reversal Risks as Key Bullish Catalysts Wane and Unlock Looms

Ethena’s (ENA) multi-week price rally faces potential reversal as key bullish catalysts wane and bearish signals emerge ahead of a significant token unlock. ENA surged over 142% in July, driven by protocol growth, stablecoin expansion, and a major buyback initiative. The DeFi platform's TVL increased by 73% in 30 days, propelling it to the sixth-largest DeFi platform globally. Simultaneously, its synthetic stablecoin, USDe, grew its supply by 75% month-over-month, surpassing FDUSD to become the third-largest stablecoin by market capitalization [1].

Major developments in July included Ethena’s listing on South Korea’s largest exchange, Upbit, and a $360 million fundraising by StablecoinX, with $260 million allocated for ENA buybacks. These moves generated heightened short-term demand and bolstered liquidity [1]. Regulatory progress further supported the rally, as Ethena and Anchorage Digital announced that their stablecoin, USDtb, met the requirements of the newly introduced U.S. GENIUS Act on July 24 [1].

However, the momentum appears to be cooling as whales and prominent investors begin to offload their holdings. Whale wallets have reduced ENA holdings by 30% over the past week, with public figure wallets cutting their balances by 75% [1]. Arthur Hayes, a veteran crypto trader who had accumulated ENA in July, recently sold $4.62 million worth of the token, citing concerns over macroeconomic risks [1]. These actions suggest a shift in sentiment and a potential profit-taking strategy before a major unlock event.

On August 5, 171.88 million ENA tokens—valued at approximately $104.56 million—will unlock, representing 2.7% of the current circulating supply. Token unlocks often introduce selling pressure, especially in bullish markets, and could hinder further price gains if traders decide to capitalize on recent profits [1]. At the time of writing, ENA is trading near $0.61, with a 11% increase in the past 24 hours, while daily trading volume has risen by 33%, placing it among the top-performing tokens [1].

Technical analysis suggests caution. ENA’s price has formed an ascending broadening wedge, a pattern often associated with bearish reversals following strong upward moves. The token is currently trading near the wedge’s lower trendline at $0.52, and a break below this level could trigger a broader pullback. Momentum indicators reinforce this bearish outlook: the MACD signal line has crossed below the MACD line, and the RSI is trending downward from overbought territory [1]. If ENA fails to hold above $0.47, the price could retest its July lows at $0.24, with further downside risks to $0.07 if the breakdown continues [1].

Market observers are closely monitoring how the upcoming token unlock and whale activity will interact with Ethena’s technical structure. A failure to sustain gains amid increased supply and profit-taking could mark a turning point for the token’s recent bullish trajectory.

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[1] https://coinmarketcap.com/community/articles/68906bf3bcd39c77ce70baf2/