Here’s why the crashing Ethena ($ENA) price may soon recover

The price of Ethena ($ENA) has plummeted by 57% from its peak in December, as the overall sentiment in the crypto market has turned negative.

This decline in $ENA mirrors the drop seen in other altcoins. For example, Ethereum has seen a 32% decrease since its December high, and Cardano ($ADA) has dropped by 45%.

Despite the downturn in token prices, Ethena’s network continues to perform solidly. The total value locked (TVL) in the network, including the USDe stablecoin market cap, has surged to over $6.12 billion, just shy of its all-time high of $6.2 billion. USDe is now the fourth-largest stablecoin, only behind Tether, USD Coin, and USDS. The 427,000 holders of USDe are earning an approximate 10% annual return, derived from arbitrage opportunities within the network.

Technical indicators suggest a potential rebound for $ENA

Looking at the daily chart, $ENA formed a double-top pattern at $1.3065 between December and January. This pattern, consisting of two peaks with a neckline at $0.8470, explains why $ENA has dropped nearly 60% from its 2025 peak.

Although the price has dipped below the 50-day moving average, suggesting bearish momentum, there is a positive sign. $ENA appears to be forming a falling wedge pattern, with the upper boundary aligning with the recent higher price swings and the lower boundary linking the lowest points since December.

As the two lines of the wedge approach a convergence point, a bullish breakout could be on the horizon. A strong breakout could drive the price higher, potentially revisiting the $1.3065 level, which represents a 130% increase from the current price.

Additional support for this optimistic view comes from the Relative Strength Index (RSI), which is approaching oversold territory, currently at 35. Historically, assets tend to recover when they reach oversold levels. However, if the price falls below the key support level of $0.4425, which represents the lower boundary of the wedge, this bullish scenario would be invalidated.

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