Ethena’s price has experienced a significant downward spiral this week, causing fear to permeate the crypto industry.
ENA has suffered losses for eight consecutive days, marking its longest losing streak on record. It plunged to a low of $0.07400 on Tuesday, hitting its lowest point since May 20th. The cryptocurrency has shed more than half of its value from its peak earlier this year.
The crypto fear and greed index have also taken a hit as Ethena joins other digital currencies in a sharp decline. Bitcoin, the largest cryptocurrency globally, has fallen from this month’s high of nearly $72,000 to $67,000. Ethereum has also slipped to $3,500, while the total market cap of all digital coins has dropped to $2.4 trillion.
This retreat has led to a decrease in the crypto fear and greed index, sliding from this week’s high of 64 to the greed zone of 60.
Despite Bitcoin ETFs continuing to accumulate assets in recent weeks without a direct catalyst for the sell-off, investors seem to be bracing for a hawkish Federal Reserve announcement following its meeting on Wednesday.
While Ethena’s price has dwindled, its ecosystem remains stable. According to DeFi Llama, the total value locked in the ecosystem has surged to a record high of over $3.38 billion, driven by the rising demand for the Ethena USDe stablecoin.
USDe has now become the fourth-largest stablecoin in the industry after Tether, USD Coin, and Dai, with over 212k holders chasing its impressive 27.5% yield. However, there are concerns surrounding USDe, including potential legislation that could ban algorithmic stablecoins in the US, as well as risks related to maintaining its peg during volatile market conditions.
Unlike Tether and USDC, USDe is not backed by fiat currency but rather operates as a “delta-neutral synthetic dollar backed by assets outside the banking system,” stabilizing its value through hedging the spot assets’ delta during the minting process.
Looking ahead, Ethena’s price forecast shows a strong bearish trend on the hourly chart, with the token slipping below the 50-period moving average and the MACD indicator dropping below the neutral level. The RSI has also shifted from overbought territory to 30, indicating a bearish path of least resistance, with the next support level at $0.6550, its lowest swing on March 16th.