Emma Nelson 
Ethena (ENA) has attracted significant attention since its launch, with many investors excited by the potential for high returns. However, the token’s price performance has generated both excitement and skepticism, as it has not been able to establish a new all-time high (ATH) in over a year. Despite the optimism surrounding its growth, concerns are emerging about its long-term viability, especially from crypto analysts who warn retail investors about the potential risks associated with investing in this altcoin. The question arises: should retail investors avoid Ethena (ENA)? Let’s delve deeper into the reasons behind these warnings.
Ethena
Analyst Explains Why Ethena (ENA) Might Be a Risky Investment
While Ethena (ENA) has seen some impressive price moves since its launch, the most significant concern lies in its high valuation. According to crypto analyst ‘DeFi Mochi’, the fully diluted valuation (FDV) of ENA stands at a staggering $6.7 billion. This figure represents a considerable leap from where early investors got in, with an FDV of just $82 million. In other words, early investors have already seen their initial investments grow by 72 times, despite the current market downturn.
While this is undoubtedly an impressive return for early investors, it raises serious concerns for retail investors. One of the primary reasons for the analyst’s caution is the high potential for a sell-off. Retail investors who buy into ENA could inadvertently trigger a wave of liquidity, as early investors might rush to capitalize on their substantial profits. This sell-off could result in substantial losses for newcomers who are left holding the token once the price takes a sharp downturn.
The Role of Venture Capital (VC) in Ethena’s Price Movement
Another critical factor that analysts are highlighting is the dominance of Venture Capital (VC) in the token’s structure. VC firms often hold large amounts of a given cryptocurrency and, as such, can exert significant influence over its price movements. In Ethena’s case, the dominance of VC-backed entities makes the coin more susceptible to price manipulation or even mass sell-offs if those investors decide to exit the market.
The future price of ENA is further complicated by token unlock schedules. Just a few days ago, 2.07 billion ENA tokens were unlocked, which immediately increased the available supply and put downward pressure on the price. Even more concerning is the upcoming token release on April 2, 2025, when an additional 937.5 million tokens will be unlocked. This could once again flood the market with supply, further reducing the token’s value and adding to its overall volatility.
Caution Advised for New Investors
Given these points, the warning from crypto analysts is clear: new investors should proceed with caution when it comes to investing in Ethena (ENA). Despite its strong initial performance, the high market cap, the looming VC influence, and the token unlock events all contribute to a risky investment environment.
Ethena’s Current Price Performance
At the moment, Ethena’s price is experiencing some bullish momentum. It is currently trading at $0.4499, with a 24-hour trading volume of $436.92 million, indicating a strong interest from investors. However, despite its recovery, Ethena is still a considerable 70% below its all-time high (ATH) of $1.52, which was set about a year ago. This significant gap between its current price and its ATH suggests that Ethena has yet to fully recover its former bullish trajectory.
The derivative data on Ethena shows that long positions are currently dominant, indicating that traders are betting on an upcoming price rally. However, the high volatility in its price means that many holders have been hit with liquidations during the recent market fluctuations. This volatility is likely to continue, as more tokens become available through scheduled unlocks, adding pressure to the market.
Can Ethena (ENA) Continue Its Price Rally?
The future outlook for Ethena (ENA) remains uncertain. Some analysts believe that $0.46 represents a crucial support level for the token, and if it drops below this threshold, it could retest lower levels between $0.42 and $0.44. However, if the price manages to break through the $0.50 resistance level, a rally toward $0.55 or even $0.60 could be in the cards. For this to happen, the token would need to overcome significant resistance levels and stabilize after the recent unlocking event.
In conclusion, investors must carefully track Ethena’s price movements and be cautious when making any investment decisions. The token’s future is far from certain, and while there is potential for growth, the risks involved—particularly from high VC influence, upcoming token unlocks, and its high market cap—cannot be ignored. For now, potential investors should stay alert and closely monitor market trends before committing to ENA.
