Ethena (ENA) Price Skyrockets Over 20% To 4-Month High, Rally To $1 Looming?

Ethena price has risen by more than 20% in the last 24 hours to its highest level in four months as the market anticipates a revenue-sharing proposal.

The ENA token, is used in Ethena’s synthetic dollar protocol on the Ethereum blockchain. Its price increased in anticipation of a governance decision that will have a direct impact on ENA holders.

Wintermute Proposes Fee Switch for Ethena Holders

The recent Ethena price rally comes after Wintermute, a leading crypto market maker, proposed a new fee-sharing model for its governance token, ENA.

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As per this proposal, some of the revenue generated would be distributed back to ENA holders. This is so that they can gain from the growth of the protocol.

Wintermute’s proposal suggests that ENA holders do not have certain financial incentives linked with the performance of Ethena’s price at the moment. This leads to the divergence of interest of the protocol’s participants and its performance.

Wintermute has suggested that there needs to be certain conditions in place. These include the achievement of a certain threshold for the circulating supply of USDe, Ethena’s stablecoin, and generating steady revenues, for the revenue sharing model to be put in place.

The risk committee is likely to weigh these factors. They would looks at possibly ensuring proper implementation of the fee switch in the near future.

Ethena Price Rally Driven by Strong Market Demand

The announcement of the proposal has garnered much attention in ENA, which has translated to increased trading and price volatility. In the past 24 hours, trading volume of ENA has increased by 61% to $482 million.

This indicates the market openness and demand. Such an increase in the volume indicates the rally has more than just speculative trading driving it.

The open interest for ENA also followed the same trend. It surged by 8% as evidenced by data from Coinglass. When the open interest increases during a price rally, it is often an indication that new money is flowing into the market as more people open positions hoping for more gains.

ENA Price Technical Analysis

Currently, ENA is trading at $0.51, and some analysts have started forecasting the price to rise as high as $1.00. The present upward trajectory has allowed ENA to break through major barriers.

Breaking through upper boundary of Bollinger Bands, is a fairly convincing buy signal. If ENA is able to sustain this momentum and trading volume remains high, a break to higher resistance levels at or close to $0.60 or $0.65 could be possible in the near future.

Ethena’s market standing seems sound. It shows a fully diluted market cap of close to $5 billion and annual revenue of about $150 million.

If the proposal by Wintermute is okay, then the revenue sharing model could be of value to ENA holders, hence more investors join in and there could be a rise in the price.

ENA/USD 1-day price chart (source: TradingView)

There are also technical factors that back up the current rally. According to the technical analysis, the MACD indicator is positive, with the MACD line above the signal line.

This points to a continuing buyers’ zone. Likewise, the Chaikin Money Flow (CMF) is positive, pointing to capital inflow and rising investors’ interest in ENA.

Furthermore, the recent breakout from the long-term falling wedge pattern adds more credence to the bullish view. This pattern on the ENA price chart from May to August, is likely due to a trend shift from bearish to bullish.

After coming out of this pattern in late August, ENA price has been on the rise. That is a concept evidenced by higher lows and higher highs, both of which are bullish signs.

If the present market condition persists, ENA could challenge the psychological $1.00 resistance level in the next few weeks.