Ethena's Rate Bucks Crypto Slump before Institutional Stablecoin Debut

Ethena's value is demonstrating impressive resilience amidst the broader cryptocurrency market's downturn, with the majority of altcoins experiencing losses between 8 and 20% over the past 24 hours.

Currently priced at $0.40, Ethena (ENA) has only decreased by 3% on the daily chart, with trading volume increasing by 108%. The primary factor contributing to Ethena's price resilience may be the project's recent successful fundraising campaign, which secured $100 million for the launch of iUSDe, Ethena's new institutional-focused dollar-pegged token. This funding round was completed in Dec., but its details were not previously disclosed, according to Bloomberg. Several major investors participated in the round, including Franklin Templeton, F-Prime Capital, Dragonfly Capital Partners, Polychain Capital LP, and Pantera Capital Management LP.

The new token, iUSDe, is essentially a regulated version of Ethena’s existing synthetic dollar, specifically tailored for traditional financial institutions seeking exposure to crypto without directly investing in digital assets. This information was revealed in a Jan. blog post by Guy Young, founder of Ethena Labs.

Additionally, the company intends to use some of the proceeds from the token sale to finance the development of its own blockchain, according to a source familiar with the matter who spoke to Bloomberg.

Another possible factor contributing to ENA’s price resilience is the high demand for Ethena’s existing stablecoin Ethena (USDe). With its market cap approaching $6 billion, USDe has emerged as one of the leading synthetic dollars in the crypto ecosystem due to its ability to generate significant yield through basis trade strategies, even during periods of increased market volatility. Although USDe yields once reached 60%, they have since stabilized around 9%, which still offers an attractive yield compared to traditional financial instruments.

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From a technical standpoint, trader AlejandroBTC has expressed optimism about ENA’s price trend. He observed that the asset is currently situated within a recognizable accumulation range, which previously resulted in a 300% surge to $1.25 in Dec. 2024 following a period of consolidation between August and Nov. If history repeats itself, ENA could experience another substantial rally.

$ENA a good buy in this area for accumulation, better to stack and forget it imo.

However, it is crucial to acknowledge that Ethena's long-term sustainability remains uncertain. This uncertainty arises from the fact that Ethena generates yield by employing the basis trade strategy, which capitalizes on price discrepancies between the spot and futures markets. Consequently, its performance is heavily influenced by market conditions. When funding rates are high, the strategy can yield impressive results, driving demand for Ethena's assets, including ENA. However, in a bearish market with lower funding rates, this strategy may face challenges.

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