ENA Price Up 70% Since Launch Despite Andre Cronje Ethena Risk Warnings

Ethena airdropped its governance token ENA on April 2. Its price is already up over 70%, reaching the top 100 cryptocurrencies based on their market cap.

There have been concerns about Ethena’s ability to maintain its stability, leading to echoes of past fiascos such as Terra’s UST and the FTX crash. Can the same happen to Ethena, and how will this affect the ENA price?

What is Ethena?

Ethena is a synthetic dollar protocol whose main offering its USDe, a synthetic dollar. USDe is not pegged to fiat currencies, nor is it algorithmic.

Rather, it is collateralized with crypto assets and short futures positions. The way its stability is ensured is by using short futures positions to offset changes in the price of the collateral asset.

Ethena offers yields up to 37%. It does this through staking ETH and through using the funding spread from its short hedges.

On April 4, Ethena announced it will add BTC as a backing asset to its collateral basket. This aims to increase the capacity of USDe to scale by 2.5x.

However, not everyone in the crypto space is enamored with Ethena. Notably, Fantom founder Andre Cronje believes there are the Ethena protocol brings with it numerous risks.

More specifically, negative funding rates could heavily hinder Ethena’s ability to provide yield. They occur during market downtrends where short traders pay a premium to long traders to keep their positions open

Despite criticisms, some experts such as Evgeny Gaevoy, the CEO of Wintermute believe that USDe’s backing by stETH and BTC set it apart from previous unstable stablecoin projects like Terra’s UST, emphasizing its resilience and potential for long-term success.

ENA Price Prediction: Bounce or Breakdown

On April 2, Ethena airdropped 750 million ENA tokens, which represent 5% of the total supply. At the current price of $92, ENA is ranked #81 based on its market capitalization.

Shortly after its launch, ENA increased by 350% to reach a new all-time high of $1.32. However, it has been falling since and currently trades at $0.93, at the 0.382 Fibonacci retracement support level.

Since there is not sufficient data to analyze the price movement, it is difficult to predict the direction of the future trend. Rather, whether the ENA price breaks down below the $0.93 area or breaks out from its descending resistance trend line instead can determine the future trend’s direction.

A breakdown from the $0.93 area could trigger a 25% drop to the next closest support at $0.69. Conversely, a breakout from the trend line can lead to a 30% increase to the next resistance at $1.20.

ENA Launch Generates Excitement

There can be risks associated with Ethena, with the ability to sustain high yields during negative funding rates a potential issue. However, there are proponents of Ethena that believe the protocol is safe due to its sufficient basket of collateral. The ENA token increased significantly after its launch and now trades inside the top 100 cryptocurrencies based on their market capitalizations.

About the Author

Valdrin Tahiri

Valdrin Tahiri is a cryptocurrency analyst and reporter at CCN, specializing in technical analysis with a focus on Elliott Wave theory, on-chain metrics, and fundamental research. He brings over seven years of experience in the crypto space as both a trader and writer.

He discovered cryptocurrencies in 2017 while earning his MSc in Financial Markets at the Barcelona School of Economics, which sparked a deep interest in blockchain and market dynamics. Since then, he’s contributed to top crypto outlets like BeInCrypto and CoinGape.

Valdrin also served as Community Manager of BeInCrypto’s Telegram group for three years, helping grow it into one of the largest crypto communities worldwide. His expertise in market structure and price patterns allows him to break down complex trends into clear, actionable insights.

He’s published thousands of articles covering altcoins, Bitcoin cycles, and macro trends.

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