Bankless: Why is ENA rising against the trend?
Ethena's ENA rose against the trend of many altcoins dropping, increasing by nearly 10% earlier this week. Crypto researcher Jack Inabinet discussed the reasons for its rise and shared his views on whether the increase is sustainable and the project's sources of revenue.Original Title: “Ethena's Bullish Pump”
Author: Jack Inabinet, Bankless
Compiled by: Frost, BlockBeats
Editor’s Note: Amidst the downward trend of many altcoins, ENA has managed to rise against the tide. Crypto researcher Jack Inabinet discusses the reasons behind its rise and shares his views on whether the upward trend is sustainable and the sources of the project's revenue. BlockBeats compiles the original text as follows:
Many altcoins have been on a downward trend in the recent market, but Ethena's ENA has successfully risen against the trend, increasing nearly 10% earlier this week. What has led to ENA's outstanding performance? Is its upward trend sustainable?
The ENA/BTC trading pair established its local bottom last week, and Ethena's growth director stated on Twitter that important information would be released in the coming days.
After community members announced this news ahead of time, the ENA/BTC trading pair saw a good increase on Monday. Subsequently, Ethena Labs' official Twitter announced on Tuesday that USDe would be integrated into the Bybit exchange, which is the fourth largest exchange by futures trading volume in April. That afternoon, ENA soared to $1, reaching a new high since May.
This collaboration will support the spot USDe trading pair and allow Bybit users to use USDe as collateral for perpetual trading, enabling them to achieve higher capital efficiency by offsetting most of their funding payments. Additionally, users will be able to enhance their returns by providing USDe to earn products on Bybit.
If Bybit receives positive feedback after supporting the USDe trading pair, other exchanges may quickly follow suit, potentially competing with stablecoins like USDT and USDC.
To ensure Ethena's success, the demand for long leverage must remain high to keep the funding rate elevated, as this is the primary source of revenue for the project. Moreover, a decrease in the funding rate would reduce holders' returns, and when the rate turns negative, Ethena would incur losses.
While the high rates driven by the bull market supported the adoption of USDe in early 2024, the supply of the token has been declining since April 13, when the cryptocurrency market entered a downward trend.
The continued decline in rates indicates that the market frenzy has temporarily subsided. Although the integration of USDe into exchanges can help boost demand for the token, it will be difficult to salvage the product if returns continue to decline.
