The expectation of an October rally in the cryptocurrency market is starting to reappear as Bitcoin has recovered above the $64,000 mark. The Ethena Labs token, ENA, is one of the best-performing in the midst of the growing bullishness.
Will Ethena, a top performer, continue to rise as the team recommends a new asset-backed by SOL and a breakout rally?
The ENA token is now trading at $0.4001, up 20.44% on the day. By forming a second consecutive bullish engulfing candle, the ENA price action indicates a short-term rounding bottom reversal.
After the 26.64% spike last Friday, the price increase is still ongoing. Additionally, an inverted head-and-shoulder pattern is visible in the ENA price action, with a neckline that aligns with the overhead resistance level. Therefore, Ethena Labs will see a trend reversal rally following the bullish breakout of this inverted head-and-shoulder pattern.
Ethena suggested SOL as the new USDe backing asset
The recent suggestion by the Ethena Network to use Solana's SOL token as a backing asset for the USDe is what caused the huge spike in the ENA token.
This will make use of the same hedging strategy that Ethena currently employs for Ethereum and Bitcoin perpetual futures. The allocation will be introduced gradually because of Solana's lower liquidity and shorter trading history.
There is also a $2 billion open interest in Solana, according to the rumors. The funding rates for 2024 show a good situation with a chance to improve Ethena's network revenue and alignment with the Solana ecosystem.
A $100 million to $200 million SOL open interest, or 5–10% of the Solana market, is suggested by the proposal. To make sure that the total SOL allocation doesn't surpass one-third of its volume, it is also advised to add Binance and Bybit Liquid Stakes SOL, BNSOL, and bbSOL, respectively.
Within the next seven days, the Risk Committee will hold a unanimous vote on the Ethena Network, which is necessary to approve the proposal.
Technical indicators:
A positive crossover results from the bullish continuation in the MACD and signal lines.
Will $0.50 Be Recovered by the ENA Price?
The recovery rally is anticipated to reach the 23.60% Fibonacci level at the psychological $0.50 mark, according to the Fibonacci levels. Additionally, the 50% Fibonacci level at $0.83, which has a slight resistance at $0.66, is the next bullish target.
Conversely, at $0.30, the 50-day EMA serves as a vital support for the ENA price trend. This year, will Ethena's breakout rally hit $1?