Ethena Price Trend Unclear Despite Bybit Integration – USDe Ascends in Stablecoin Dominance
Is the ENA Trend Bullish or Bearish? | Credit: Hameem Sarwar
Key Takeaways
- On May 7, USDe became the third stablecoin to be listed on centralized exchange derivatives platforms.
- The ENA price has fallen by nearly 40% since reaching its all-time high price of $1.52 on April 11.
- After a failure to break out from a corrective pattern, will there be more downside for ENA in May?
USDe has been growing rapidly since its launch in December 2023. It currently ranks as the fifth largest stablecoin based on its market capitalization. The Bybit exchange’s derivative platform integrated it on May 7.
The ENA price has increased since the start of May but failed to break out from its corrective pattern. Does this signal more downside, or can ENA regain its footing and eventually break out?
Ethena Announces Bybit USDe Integration
On May 7, Ethena announced that its stablecoin USDe will integrate with the Bybit exchange. USDe becomes the first stablecoin outside of USDC and USDT to be integrated into centralized finance derivatives. Ethena will be used as collateral to trade futures, for the BTC/ETH spot pairs and within the Earn platform.
The team behind Ethena noted that USDe will allow users to capture yield when trading margin perpetual futures in Bybit. This is not possible for other stablecoins and can unlock capital efficiency for users.
An interesting use case can be receiving yield in order to offset funding rate costs. Currently, the annual yield for USDe stands at 15.3%.
It is important to note that there are concerns about USDe’s ability to provide consistent, especially in cases when there are negative funding rates that are bigger than the yield you get from longing stETH, the liquid staking token for Ethereum.
This is because USDe is a crypto backed stablecoin that stakes ETH and BTC and uses short trades as a hedge. According to the team , the earn rate from hedging was 18% in 2021, negative 0.6% in 2022 and 7% in 2023.
So, if market conditions mirror those of 2022, in a prolonged downtrend, there are concerns aboutUSDe’s ability to maintain yields. Also, there are reservations regarding the ability to maintain its peg, since its arbitrage mechanism shares similarities to the infamous UST.
Intriguingly, Bybit is the only exchange that offers perpetual futures trading for stETH , which is one of the ways Ethena keeps the USDe rate constant.
How Does USDe Compare to Other Stablecoins?
The total Stablecoin market capitalization is $160 billion. Based on its market capitalization, USDe is the fifth biggest stablecoin , trailing USDT, USDC, DAI and FDUSD.
USDT dominance is still massive at 70%. In contrast, the USDe dominance is at only 1.34% when considering stablecoins in all chains and at 2.85% when comparing it to Ethereum stablecoins.
Interestingly, all other stablecoins are present in multiple chains, while USDe is only present in Ethereum.
Nevertheless, there is a clear top five, since USDe has a market capitalization of $2.30 billion while each of the other stablecoins below it have a market capitalization of less than $1 billion.
Even though the USDe capitalization is far from fiat backed stablecoins such as USDT and USDC, it is gaining ground on DAI, the only other crypto backed stablecoin in Ethereum.
Since the USDe launch in December 2023, its dominance has increased and is currently at 30%. In contrast, DAI is at 62%.
Interestingly, despite its dominance relative to USDe, DAI does not have a use case in futures platforms in any centralized exchanges.
Can ENA Reclaim Resistance?
ENA was subject to a massive upward movement shortly after its launch. The ENA price increased over 400% in nine days, culminating with an all-time high of $1.52 on April 11.
Shortly afterward, the price began a decline under a descending resistance trend line. Then, ENA broke out from this trend line on April 29 and validated it as support the next day (green icon).
ENA has increased since but failed to move above the $0.90 horizontal area. Despite the failure to break out, the six-hour RSI is increasing and has moved above 50, both signs of a bullish trend.
ENA Price Prediction: Weakness Can Lead to Breakdown
Finally, the shorter-term two-hour chart shows that ENA has traded inside an ascending parallel channel since the beginning of May. These channels usually contain corrective movements.
In ENA’s case, the price made a failed breakout attempt on May 7 (red circle). It has fallen inside the channel since and risks breaking down below its midline.
Moreover, a bearish divergence in the two-hour RSI preceded the decline, another bearish sign.
As a result, all signs point to ENA breaking down from the channel. If this happens, the price will likely return to the 0.618 Fibonacci retracement support level at $0.77.
Outlook Remains Negative
On May 8, ENA made waves by its listing on the Bybit futures platform. However, its price action is still bearish because of the failure to break out from a long-term horizontal resistance level and the presence of a short-term corrective pattern.
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