Fall coverage of Ethena: TVL narrows, open contracts decline

Ethena (ENA) is recording a decrease of nearly 2% at the time of the update on Tuesday, extending the week’s correction to approximately 5%. Worryingly, the simultaneous weakening of on-chain demand and cash flow from retail investors could continue to push this synthetic stablecoin into a deeper decline in the coming days.

Ethena faces pressure from weak demand as the market becomes more cautious about risks

The total value locked (TVL) of Ethena continues to plummet since the crash on October 10, as funds have been pouring out of the ecosystem and users are simultaneously withdrawing or liquidating contracts. According to data from DeFiLlama, the TVL of this DeFi protocol is currently only 10.206 billion USD, a significant drop from the previous mark of 14.818 billion USD. The prolonged outflow of capital is threatening to weaken liquidity, leading to a decrease in protocol fees, which in turn adds more pressure on the price of ENA.

Not only weakened on-chain, the cautious sentiment is also enveloping the retail investor group. Data from CoinGlass records the open contract (OI) of the ENA futures contract — a measure of the total nominal value of all open positions — has fallen by 8.65% in the past 24 hours, to 727.49 million USD. This indicates that derivative traders are gradually reducing their exposure to risk, reflecting an increasing caution towards Ethena in the short term.

Technical Outlook: Does Ethena have the potential to extend its fall to 0.45 USD?

Ethena (ENA) is continuing its adjustment trend after being rejected at the resistance area of 0.5343 USD — a region that was once a significant support in early October. At the time of writing, ENA is trading below the psychological level of 0.50 USD and is approaching the short-term support line formed from the double bottom pattern (12/10 and 23/10), located just above the 0.4600 USD region.

If the selling pressure persists, the risk of breaking this trend line will increase, opening up the possibility of the price retreating to test the Pivot point S1 at 0.4459 USD.

Market momentum is also leaning towards the bears. On the 4-hour chart, the MACD indicator crossed below the signal line on Tuesday, indicating that selling pressure is gaining dominance again. At the same time, the RSI on the same timeframe has dropped to 53 — approaching the neutral zone and reflecting a significant weakening of buying strength.

However, the recovery scenario has not been ruled out. If Ethena regains the 0.50 USD mark and closes steadily above 0.5343 USD, the bulls may re-establish a sustainable uptrend. At that time, the next important resistance levels supporting the breakout lie at Pivot R2: 0.5817 USD and R3: 0.6453 USD.

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