Can Ethena Coin’s Price Reach $10?
Ethena Labs’ DeFi project, the Ethena coin (ENA), has captured the attention of investors, analysts, and traders. The project’s unique approach to its stablecoin offering, USDe, has sparked significant interest. Now, the team has announced the launch of an airdrop for its ENA token.
Since its launch, the ENA coin price has experienced a surge of over 64%, reaching a daily high of nearly $0.93 on April 3 within just 24 hours. The token is inching closer to breaking the psychologically significant $1 price level, which is often attributed to the absence of decimal zeroes (no offense to SHIB, DOGE, and others).
Additionally, the project’s Total Value Locked (TVL) has seen impressive growth of nearly 2,088% Year-to-Date in 2024, as reported by DeFiLlama data.
Strategic initiatives have played a crucial role in driving the growth of the Ethena coin. Notably, the DeFi platform successfully raised $14 million in February 2024 from prominent crypto venture capitals such as Dragonfly and Arthur Hayes’ Maelstrom Fund.
Arthur Hayes, the BitMEX founder, has expressed a bullish outlook on the ENA coin, predicting a price target of $10 for the Ethena token. Hayes believes that despite the relatively bearish market conditions, the ENA price has demonstrated significant growth and could experience even stronger momentum once the market turns bullish.
Ethena Labs’ promise of over 27% yields in USDe has garnered attention, reminding traders of the Terra Luna days. However, the ENA crypto developers assure that USDe operates on a fundamentally different model than UST. According to the company’s documentation, Ethena generates high yields through a combination of collateralization with staked Ethereum, delta hedging, and yield generation. The stability of the stablecoin offering is backed by staked Ethereum, providing a sense of security.
To mitigate volatility, the Ethena token team takes short positions on ETH through centralized exchanges, effectively offsetting potential losses from fluctuations in staked ETH prices.
Despite the optimism expressed by Hayes and other traders, reaching the $10 price level for the ENA coin would present challenges, at least in the near future.
One obstacle is the token’s airdrop. Airdrops often lead to bearish sentiment, as recipients tend to sell their tokens for profit. For example, trader CoinMamba plans to dump the ENA coins received in the Ethena airdrop, which could exert bearish pressure on the ENA token price if more traders follow suit.
Another trader, under the username ‘Ice,’ has highlighted some structural vulnerabilities of Ethena. Ice suggests that in the event of a large-scale withdrawal of assets, the Ethena coin could face significant disruptions. This means that in bearish markets, minor losses could trigger mass withdrawals, straining liquidity and potentially causing the eUSD stablecoin to depeg.
However, Ice proposes a solution to prevent eUSD depegging and maintain stability. The trader suggests that Ethena Labs secure commitments of over $10 billion for buying and redeeming eUSD at depeg. However, stabilizing eUSD could inadvertently impact the value of Ethereum in a bear market.
In conclusion, it is difficult to determine whether the Ethena coin price will reach $10, as cryptocurrency assets are known for their volatility. However, it is clear that the ENA price will not touch $10 unless it survives the bearish sell-off triggered by the airdrop event.