🌎 Ethena Price Drops Amid Broader Crypto Market Decline

Ethena price has experienced a significant decline this week as fear spreads through the crypto industry. ENA has posted losses for eight consecutive days, marking its longest losing streak. The token plummeted to a low of $0.07400 on Tuesday, its lowest point since May 20th, losing over half of its value from this year’s peak.

Crypto Fear and Greed Index Slips

Ethena is not alone in its downward trend. Other major cryptocurrencies have also seen substantial losses recently. Bitcoin, the largest cryptocurrency, has fallen from a high of nearly $72,000 earlier this month to $67,000. Ethereum has slipped to $3,500, while the overall market cap of digital coins has decreased to $2.4 trillion.

This market retreat has led to a decline in the crypto fear and greed index, which has dropped from a high of 64 to a greed zone level of 60.

There has been no direct catalyst for this sell-off, even though Bitcoin ETFs have continued to accumulate assets in recent weeks. Investors are likely anticipating a more hawkish stance from the Federal Reserve as it concludes its meeting on Wednesday.

Ethena Ecosystem Remains Steady

Despite the price drop, Ethena’s ecosystem remains stable. According to DeFi Llama, the total value locked in the ecosystem has reached a record high of over $3.38 billion, driven by increased demand for the Ethena USDe stablecoin.

USDe has now become the fourth-largest stablecoin in the industry, following Tether, USD Coin, and Dai. The number of USDe holders has surged to over 212,000, attracted by its 27.5% yield, which is higher than what Terra Luna offered at its peak.

Concerns About USDe

There are a few concerns regarding USDe. First, proposed US legislation by Cynthia Lummis could potentially ban algorithmic stablecoins in the country. Second, there is a risk that the stablecoin could lose its peg during substantial volatility in the crypto market.

Unlike stablecoins such as Tether and USDC, USDe is not backed by fiat currency. Instead, its developers describe its mechanism as a “delta-neutral synthetic dollar backed by assets outside the banking system.” It maintains stability by hedging the spot assets’ delta during the minting process.

Ethena Price Forecast

The 4-hour chart shows a strong bearish trend for the Ethena token, which peaked at $1.0800 last week. The price has now fallen below the 50-period moving average, and the MACD indicator has dropped below the neutral level.

The Relative Strength Index (RSI) has moved from an overbought level of 75 to the current 30. Therefore, the path of least resistance for the token remains bearish, with the next support level to watch being $0.6550, its lowest point on March 16th.