Ethena’s Bullish Pump
In a market where many altcoins are experiencing a downtrend, ENA from Ethena has managed to buck the trend and rise by nearly 10% at the beginning of this week. What has contributed to ENA’s impressive performance? And is this upward trend sustainable?
The ENA/BTC trading pair established its local bottom last week, and Ethena’s Growth Director indicated on Twitter that there would be important announcements in the coming days.
Following the early release of this news by community members, the ENA/BTC trading pair saw a significant increase in value on Monday. Subsequently, Ethena Labs’ official Twitter account announced on Tuesday that USDe would be integrated into the Bybit exchange, the fourth largest futures trading platform in terms of trading volume in April. Later that afternoon, ENA surged to $1, reaching a new high since May.
This partnership will support spot trading pairs with USDe and allow Bybit users to use USDe as collateral for perpetual trading, thereby enabling them to achieve higher capital efficiency by offsetting most of their funding payments. Additionally, users will be able to increase their earnings by providing USDe to Bybit’s product offering.
If Bybit receives positive feedback after supporting the USDe trading pairs, other exchanges may also quickly support USDe, potentially creating competition with stablecoins like USDT and USDC.
For Ethena to succeed, there needs to be a sustained demand for long leverage to maintain higher funding rates, as this is the project’s main source of revenue. Furthermore, a decrease in funding rates would lower holders’ earnings, and if rates turn negative, Ethena would incur losses.
Although the high rates driven by the bull market supported the adoption of USDe in early 2024, the token’s supply has been decreasing since April 13 when the cryptocurrency market entered a downward trend.
The continued decrease in rates suggests that the market frenzy has temporarily subsided. While the integration of USDe on exchanges can help increase demand for the token, it will be difficult to revive the product if the returns further decline.
Tags:
2023 market trends
Bankless
Bybit
ENA
USDC
USDe
USDT
altcoins
Bitcoin
downtrend
Source link:
https://www.theblockbeats.info/news/53414
Note: The views expressed in the article do not represent investment advice.