Ethena (ENA) price has done well this week even as the crypto industry goes through a deep meltdown with Bitcoin trading at $65,000. The token, which went live on Tuesday, has skyrocketed, giving it a market cap of over $1.2 billion. So, what is Ethena and is it a good investment?
What is Ethena in crypto?
Ethena is a big blockchain network that has been around for a while. The platform runs Ethena USDe, a stablecoin that has a market cap of over $1.87 billion. It is backed by Dragonfly, Arthur Hayes, Binance Labs, OKX Ventures, and Deribit.
Ethena aims to provide the holders of USDe stablecoin with some of the biggest yields in the industry. Data shows that the coin has a total value locked (TVL) of over $1.9 billion and over 117k holders. These users are generating a yield of about 35.4%.
The question among most investors is where this yield comes from. According to the developers, the synthetic dollar returns come from the staked Ethereum. It pairs ether liquid staking tokens with short ether perpetual futures, which helps to maintain its price at $1. This cash-and-carry trade then harvests the derivatives funding rates for yields.
Ethena is solving a major issue in the cryptocurrency industry where many people hold stablecoins like Tether (USDT) and Circle’s USD Coin. In theory, if you hold these coins, you are losing money through inflation while the companies generate returns through interest.
Ethena is not the only company solving this problem. Ondo Finance has introduced US Dollar Yield, which distributes returns to investors. The USDY token has an APY of about 5.20%.
Ethena’s ENA price prediction
Ethena is now going through its airdrop in which holders of the token can redeem it in the next six weeks. The developers distributed 750 million tokens, equivalent to 5% of the total supply.
ENA token price has done well after going public on Tuesday. It jumped to a high of $0.9132 on Monday, much higher than the initial price of $0.50. In most cases, many cryptocurrencies go through this surge initially after going public. We saw that with tokens like Aptos, Celestia, and Sui.
They then retreat as some of the earlier token buyers exit their positions and take profits. Therefore, I believe that the token will pull back in the next few days and then resume the bullish trend. On the ten-minute chart above, the ENA token has formed a double-top pattern whose neckline is at $0.71. This trend will depend on the overall performance of the crypto industry.
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