Ethena distributed its governance token, ENA, through an airdrop on April 2. The token's price has surged by more than 70%, propelling it into the top 100 cryptocurrencies by market capitalization. However, there are apprehensions about Ethena's capacity to sustain this growth, with comparisons drawn to previous incidents like Terra's UST and the FTX crash, which have raised concerns about stability. The price of ENA price has dropped by over 11% in the past 24 hours, currently trading at $0.9461. This decline is attributed to investors selling off some of their profits following the recent rally in cryptocurrency.
ENA's chart shows a nuanced picture with its technical indicators sending mixed signals. The Moving Average Convergence Divergence (MACD) Histogram's approach toward the zero mark indicates a potential slowdown in the bearish momentum. This could suggest a period of consolidation or a possible reversal in the near future, as the shorter-term moving average converges toward the longer-term moving average. However, the Relative Strength Index (RSI) paints a different picture, showing that sellers are gaining strength over buyers. This could indicate a continuation of the downward trend or even a potential intensification of selling pressure.
Ethena Labs has integrated Bitcoin (BTC) as collateral for its synthetic dollar-pegged product, USDe, aiming to scale its supply from $2 billion. Bitcoin's addition is expected to enhance liquidity and security for USDe holders. Ethena's decision comes after USDe's launch on Ethereum faced scrutiny due to high annual percentage yields (APY), which have since decreased. The move to add Bitcoin aims to leverage its growing derivative markets for better scalability and liquidity, enhancing USDe's stability. USDe was previously backed by Ether (ETH), Tether (USDT), and Ether-based liquid staking tokens, with major exchanges like Binance, ByBit, and OKX providing the majority of its collateral. Despite Bitcoin lacking native staking yields, Ethena believes its addition will be beneficial, especially during bull crypto markets when traditional staking yields are less significant. The move also aligns with Ethena's strategy to reduce reliance on traditional banks. As Bitcoin's open interest has surged, Ethena sees an opportunity to increase USDe's scalability, aiming to differentiate it from stablecoins.
Ethena's Total Value Locked (TVL) surged from $1.54 billion to over $2 billion in just four days, indicating a 30% growth and reflecting growing investor interest. This growth is attributed to Ethena's 27% APY and its recent ENA token airdrop, which rewarded eligible users with 750 million tokens. The protocol is supported by prominent investors like Delphi Digital, Wintermute, and Galaxy Digital, lending credibility to the platform. However, concerns have been raised by DeFi experts like Andre Cronje and Ki Young Ju about potential risks, including the use of perpetual contracts and plans to integrate Bitcoin as a backing asset for USDe. Cronje warned of a collapse similar to the TerraUSD (UST) debacle, while Ju questioned Ethena's ability to maintain a delta-neutral BTC strategy during bear markets.
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