Can Ethena Coin’s Price Hit $10?
The Ethena coin (ENA), a decentralized finance (DeFi) project by Ethena Labs, has captured the attention of investors, analysts, and traders. Its unique approach to its stablecoin, USDe, has generated significant interest. Now, the team has announced the launch of an airdrop for its ENA token.
Since its launch, the price of ENA has surged by over 64%, reaching a daily high of almost $0.93 on April 3, within just 24 hours. It is now on the verge of surpassing the $1 price level, which is considered a crucial psychological resistance point due to the absence of decimal zeroes (sorry, SHIB, DOGE, and others).
Additionally, the project’s Total Value Locked (TVL) has increased by a staggering 2,088% Year-to-Date (YTD) in 2024, highlighting its impressive growth, according to data from DeFiLlama.
Ethena has implemented strategic initiatives to fuel the growth of its coin. For instance, the DeFi platform successfully raised $14 million in February 2024 from prominent crypto venture capitalists such as Dragonfly and Arthur Hayes’ Maelstrom Fund. Hayes himself has been bullish on ENA, predicting a price target of $10 for the Ethena token. The BitMEX founder believes that ENA’s remarkable growth in a bearish market indicates its potential for an even stronger rally during bullish phases.
Ethena Labs’ promise of over 27% yields in USDe has attracted attention, reminiscent of the Terra Luna days. However, the ENA developers assure that USDe operates on a fundamentally different model than UST. They explain that Ethena achieves high yields through a combination of collateralization with staked Ethereum, delta hedging, and yield generation. The stability of their stablecoin offering is backed by staked Ethereum, mitigating volatility through short positions on ETH via centralized exchanges.
Despite the optimism surrounding ENA, reaching the $10 price level would pose challenges, at least in the near future. The first hurdle is the upcoming airdrop, which often leads to profit-taking by recipients, potentially exerting bearish pressure on the ENA token’s price.
Crypto trader CoinMamba, for example, plans to sell the ENA coins received in the airdrop. If more traders follow suit, it could further weigh on the ENA price. Another trader known as ‘Ice’ has highlighted structural vulnerabilities in Ethena. The trader warns of potential disruptions if there is a massive withdrawal of assets, which could strain liquidity and potentially lead to eUSD depegging.
However, ‘Ice’ proposes a solution to prevent eUSD depegging and maintain stability by suggesting that Ethena Labs secure commitments of over $10 billion for buying and redeeming eUSD at depeg. Yet, stabilizing eUSD could inadvertently impact Ethereum’s value during bearish market conditions.
So, while it is challenging to predict whether the Ethena coin’s price will reach $10 due to the inherent volatility of crypto assets, one thing is certain: it will not touch $10 unless it survives the bearish sell-off triggered by the airdrop event.