ENA Price Bounces Back as USDe Adoption Grows, Bringing Memories of Terra

The Ethena price has bounced back in the past few days as Bitcoin and other altcoins rose, and the fear and greed index emerged from the fear zone.

The Ethena (ENA) price soared on Tuesday as Bitcoin and other altcoins continued to rise. ENA token rose to a high of $0.50, which was its highest level since July 3. It remained about 76% below its all-time high, bringing its market capitalization to about $514 million.

What happened to the Ethena price?

Ethena is a blockchain that describes itself as the “gateway to boundless DeFi.” The network has a total value locked (TVL) of over $3.39 billion, making it the seventh-biggest decentralized finance (DeFi) platform.

The Ethena price soared on Tuesday as other cryptocurrencies continued to rebound. This rebound started last week after data showed that the German government had completed selling its Bitcoin holdings. In a statement, the government said that it had acquired the cryptocurrency at an average price of $26k.

The rebound also happened as Jerome Powell hinted that the Federal Reserve will start cutting interest rates. In his speech, Powell said that disinflation was underway and that the central bank will adjust its monetary policy accordingly.

Another factor that helped the Ethena price was the Trump shooting incident. The former president had a good week as he had high odds of becoming the next US president. He also had a major win in court after Judge Aileen Cannon dismissed his classified documents case.

Finally, the Ethena ecosystem had some good news as its website showed that the network had added over 250k users in the past few weeks. However, the total value locked in the ecosystem continued to decline. At 974k ETH, the TVL was substantially lower than this month’s high of 1.19 million ETH.

In dollar terms, the TVL has pulled back to $3.39 billion. Notably, the majority of the TVL in the Ethena ecosystem is driven by USDe stablecoin holders.

Why is USDe important?

USDe has become the world’s fourth largest stablecoin after Tether, USDC, and Dai. This growth has been driven by its high yield, which stood at 7% on Tuesday. This yield is notably higher than the returns offered by most junk bonds.

USDe generates its yield through a unique approach that combines staked asset consensus and funding. It also earns a basis spread from hedging derivatives. In summary, the network stakes Ether and then opens derivatives positions involving shorts to hedge the delta of the received assets.

USDe’s growth and high yield have brought back memories of Terra USD, a stablecoin that led to the collapse of Terra’s ecosystem. UST offered double-digit rewards to investors, attracting over $40 billion in assets.

Ethena has continued adding more partners to the ecosystem. Cega has brought in new structured products built on the USDe stablecoin. Lyra Finance also added a new USDe product that lets users take advantage of Ethereum's upside without risking their initial capital.

Ceffu, an enterprise-grade custody and liquidity provider, also added USDe to its platform. Another possible reason why Ethena price is rising is that its institutional investors are buying the dip.

The Ethena project is backed by Arthur Hayes, Dragonfly, OKX Ventures, and Binance Labs. Other investors are Bybit Mirana and Deribit,

Ethena price analysis

The four-hour chart shows that the ENA price found strong support in the ascending blue trendline above. It has now bounced back above the key resistance point at $0.4413, its highest point on July 10th, and above the 50-period moving average.

The Relative Strength Index (RSI) has moved above the overbought level while the MACD and the Stochastic Oscillator point upwards. Therefore, the Ethena price will likely continue rising as buyers target the key resistance point at $0.5500. The stop-loss of this trade will be at $0.4413.

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