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. ENA token spiked to a high of $0.50 on Tuesday morning, its highest point since July 3rd.
USDe adoption is growing
Ethena’s price is soaring mainly because other cryptocurrencies like Bitcoin, Ethereum, and Solana are rising.
This rebound occurred after the German government had completed selling its Bitcoin holdings, and Jerome Powell hinted that the Fed would start cutting interest rates.
Cryptocurrencies also jumped after the Trump shooting incident, which boosted his odds of becoming the next president. He also won a major case in which Judge Aileen Cannon dismissed his classified documents case.
Internally, the Ethena ecosystem is doing well. Data on its website shows that the network has added over 250k users in the past few weeks.
However, while this number has risen, the total value locked in the ecosystem stands at 974k ETH, down from this month’s high of 1.19 million ETH. In dollar terms, the TVL has pulled back to $3.39 billion.
Ethena’s TVL comes from the USDe stablecoin holders. USDe has become the fourth-biggest stablecoin in the world after Tether, USDC, and Dai because of its strong yield. It has a 7% yield, which is higher than most junk bonds.
USDe generates its yield from a complex approach that involves staked asset consensus and funding and the basis spread earned by hedging derivatives. In other words, the network stakes Ether and then opens derivatives positions involving shorts to hedge the delta of the received assets.
USDe and memories of Terra
USDe’s growth and high yield have brought 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.
Meanwhile, 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.
