Ethena [ENA] recorded a major surge over the past 24 hours, with the crypto climbing by 13% on the charts.
However, while this may seem bullish on the surface, most of the growth had little to do with the protocol’s performance. In fact, a call for a massive rally may be too early as it stands.
Ethena capital remains slim
The strength of ENA’s press time price had little to do with the protocol as limited capital flowed into Ethena and the protocol generated minimal fees. In fact, DeFiLlama data revealed that the Total Value Locked (TVL) increased by roughly $160 million, hitting $4.719 billion at press time.
TVL measures the health of a protocol, and when there is a surge in its value, it alludes to greater interest in the asset and its long-term value.
Likewise, the scale is often reflective of the conviction depositors hold.
For Ethena, that conviction has been slim so far. Interestingly, the protocol’s revenue has been minimal too, with DeFiLlama showing that Ethena generated just $56.91 in the last 24 hours.
Over the last 30 days, revenue has remained minimal as well, with just $21,317 generated.
What about the spot market bid?
There may be growing conviction among spot traders in the market as they flip the script. According to CoinGlass, Spot Market Netflow recorded around $100,000 in Net Inflows.
This marks a gradual turnaround from the previous two days, when traders sold roughly $4.7 million worth of the asset between 2-3 September.
The last 24 hours saw the Netflow turn negative, with the outflow worth $27.41 million – A sign of strong buying interest. In fact, buyer strength has grown, especially over the last 12 hours, with Netflow at -$358,000.
And yet, when viewed over a longer timeframe, selling pressure has largely dominated the market.
Over the last two weeks, the seven-day Netflow was the only negative reading with figures of -$4.82 million. However, across the other periods, there has been significant selling too.
Perp direction needs to be watched
The direction of the perpetual market remains one to watch, especially through the lens of the Open Interest-Weighted funding rate.
The OI-Weighted Funding Rate measures whether a majority of the capital in the perpetual market is positioned long or short. At the time of writing, the majority of positions were net long, with a reading of 0.0023% on the chart.
However, the concern remains that between the peak on 3 September and press time, the OI-Weighted Funding rate dropped from 0.0059% to 0.0023%. This suggested that short positions were expanding.
A sustained decline in the OI-Weighted Funding Rate would imply a higher chance of it weighing on the asset’s performance and potentially pushing the price lower. However, if the indicator flips upward, there is a chance that ENA’s price could rise significantly.
Final Summary
- ENA rose by 13%, but Ethena’s TVL and revenue growth remain limited.
- Spot buying has strengthened, while falling funding rates could weigh on ENA.