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Ethena Crosses $3B Supply Amid Staking Boost – ENA Price Gains 15% in June

Last Updated June 4, 2024 9:54 AM
Valdrin Tahiri
Last Updated June 4, 2024 9:54 AM

Key Takeaways

  • Ethena’s stablecoin USDe supply surpassed $3 billion, becoming the 4th largest stablecoin.
  • The Ethena (ENA) price increased by 15% in June, but still trades 35% below its all-time high.
  • Will the ENA price reach a new all-time high in June, or will it get rejected and fall to new lows instead?

ENA’s release in April had both its proponents and detractors, the latter of whom believed the protocol carries too much risk  if market conditions deteriorate. However, this has not stopped the supply of Ethena’s stablecoin USDe from increasing rapidly.

The ENA price is also increasing despite hitting a temporary roadblock today, on June 4. Once the correction is over, ENA could follow USDe’s lead and rise toward a new all-time high.

Ethena Stablecoin Supply Increases

Ethena’s USDe is the fourth biggest stablecoin  with a market cap of $3.08 billion and is the fastest USD asset to reach this milestone. USDT ranks first with $112 billion, followed by USDC and DAI at $31.9 and $5.16 billion, respectively. So, the USDT dominance is over 70%. From crypto backed stablecoins, USDe is second, trailing only DAI.

An interesting differentiation between the four is that USDT, USDC and DAI are present in over 40 blockchains. On the other hand, Ethena’s USDe is solely on Ethereum.

It is also interesting to note that the second and third fastest stablecoins to reach 3 billion have not continued growing at the same rate. FDUSD’s circulation has fallen to $2.5 billion from its all-time high of $4.06 billion in April, while UST faltered in the infamous Terra crash.

So, the increase in Ethena’s stablecoin supply is not a guarantee of future growth.

Ethena Revenue
Blockchain Revenue | Credit: Token Terminal

Ethena’s remarkable rise this month can be linked to its high yield rates. Currently, USDe offers a yield of 33.5% , vastly outpacing its competitors. For comparison, Circle’s USDC yields 6.6% on Aave V3, Maker’s sDAI APY is 8%, and USDC deposited in Solana’s Kamino protocol yields 14%.

In the past seven days, Ethena’s revenue of $7 million only trails Tron and Ethereum, and actually outpaces Solana at $6.38 million.

Ethena Staked USDe
Staked USDe | Credit: Dune

Another interesting trend is that the portion of staked USDE (sUSDe)  is increasing rapidly. In May, the sUSDe share has tripled from 13% to 39%. This can be attributed to the change in the mechanism of receiving yield from assets that back sUSDe.

Since May 16, the sUSDe contract receives 80% of the returns from the assets backing USDe, boosting its annual yield (APY) to 37.2%. This high yield came as a result of only 15% of USDe being staked, so the returns from the unstaked portion are funneled into the staked portion. But, the yield will decrease as USDe staking increases.

ENA Price Prediction: Is the Correction Over?

The daily time frame ENA price chart shows a correction under a descending resistance trend line ongoing since the all-time high of $1.52 on April 10. The decline led to a low of $0.65 on May 16.

ENA started an upward movement afterward, breaking out from the trend line on May 20. Then, the price reclaimed the $0.80 horizontal area the next day, validating it as support.

ENA Price Breakout
ENA/USDT Daily Chart | Credit: TradingView

The daily RSI and MACD support the increase, since they are trending upward and above 50 and 0, respectively.

However, the 0.5 Fibonacci retracement resistance level at $1.09 rejected the ENA price today, on June 4. So, a look at the short-term increase is needed to determine if the ENA price has started a bullish trend reversal or if this is simply a relief rally.

A closer look at the ENA increase implies it is impulsive. Since May 16, ENA has completed a five-wave increase (black), A-B-C correction (white) and started another five-wave upward movement (yellow).

ENA Wave Count
ENA/USDT Six-Hour Chart | Credit: TradingView

So, the wave count suggests ENA will continue increase and reach a new all-time high. The ascending support trend line in place since the upward movement started has to hold for this wave count to remain valid.

The target for this second upward movement is at the all-time high of $1.52. If the ENA price breaks out, the 1.61 external Fibonacci retracement of the drop will create the next target at $2.05.

ENA Poised for a New All-Time High

The ENA price has increased alongside the surge in Ethena’s stablecoin supply. The higher yield in staking drives the latter’s increase. Due to the shape of the upward movement, the ENA price is likely to increase toward a new all-time high. This is true as long as the ascending support trend line exists.

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
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