Ethena drops 14%, but why investor sentiment remains strong

• ENA’s market decline has been driven by derivative traders betting against a price increase.
• Investor sentiment remains strong despite the struggling price, as accumulation continues to rise.

Ethena [ENA] has been on a downward path over the past 24 hours, dropping 14%, while the broader cryptocurrency market capitalization slipped by 2.77%.

Market analysis showed that derivative traders have been behind the fall. However, spot traders could see this as an opportunity to accumulate the asset. Here’s how it could play out:

Retail bulls jump in with bulk buys

While ENA continues to struggle in the market, investor accumulation has increased.

CoinMarketCap’s community sentiment tool, which allows investors to vote on whether they are bullish or bearish, recorded a spike of approximately 4%.

Source: CoinMarketCap

This sentiment rose from 80% to 84% in the past 24 hours. AMBCrypto noted that this new group of traders has begun accumulating the asset.

Over the past 24 hours, these investors purchased approximately $4.63 million worth of ENA, adding to the momentum that has been building in recent days.

Further analysis shows that in the last four days, this group has accumulated $19.07 million worth of ENA.

Source: CoinGlass

This suggests that spot traders have been taking advantage of the recent market decline to acquire more of the asset.

Notably, while the broader Futures market reflected a bearish sentiment, traders on Binance have taken a different stance.

The Long-to-Short Ratio — which indicates buying pressure when above 1, and selling pressure when below 1 — showed a Binance reading of 2.96 at press time.

Such a high reading suggests significantly more buying volume on Binance, which currently accounts for $590 million of the $1.18 billion in total trading volume.

Shorts intensifies as Funding Rate dips

The majority of Futures traders remained bearish at the time of writing as well. Notably, both Open Interest and the Funding Rate have declined.

Open Interest dropped by 13.79% to $381.29 million, indicating a significant reduction in the value of contracts in the Futures market.

Source: CoinGlass

Likewise, the Funding Rate fell to -0.0009%, indicating that most open contracts were short positions. So, short traders were paying a premium to minimize the price gap between ENA’s Futures and spot prices.

Thus, Ethena’s bearish pressure has been largely driven by Futures traders.

Liquidity map hints at $0.35 ENA target

AMBCrypto’s analysis of the liquidation heatmap shows that the market currently holds a neutral stance.

Typically, liquidity clusters help identify likely price targets, as they represent unfilled market orders. However, these clusters appeared minimal and scattered on the chart.

Source: CoinGlass

That said, it’s important to note that there was a notable concentration of liquidity around the $0.35 region, suggesting a higher likelihood that the price may trend toward that level.