Crypto Fear and Greed Index dips as Ethena ENA price forecast fluctuates
Ethena’s price has experienced a significant decline this week, causing fear to permeate throughout the cryptocurrency industry. In fact, ENA has suffered losses for eight consecutive days, marking its longest losing streak on record. On Tuesday, it plummeted to a low of $0.07400, reaching its lowest point since May 20th. As a result, it has lost more than half of its value from its peak earlier this year.
Notably, Ethena is not alone in this downward trend. Many other cryptocurrencies have also experienced a sharp decline in recent days. Bitcoin, the largest cryptocurrency in the world, has dropped from its monthly high of nearly $72,000 to $67,000. Ethereum has also slipped to $3,500, while the total market capitalization of all digital coins has fallen to $2.4 trillion.
As a consequence of this retreat, the crypto fear and greed index has decreased from its weekly high of 64 to the greed zone of 60.
Interestingly, there doesn’t seem to be a direct cause for this sell-off, especially since Bitcoin ETFs have continued to accumulate assets in recent weeks. Therefore, it is likely that investors are anticipating a hawkish stance from the Federal Reserve following its meeting on Wednesday.
Despite the drop in price, 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 the increased demand for the Ethena USDe stablecoin. In fact, USDe has now become the fourth-largest stablecoin in the industry, after Tether, USD Coin, and Dai. Its number of holders has grown to over 212,000 as investors chase its impressive 27.5% yield, which is higher than what Terra Luna used to offer in its prime.
However, there are a few concerns regarding USDe. Firstly, there is a proposed US legislation by Cynthia Lummis that aims to ban algorithmic stablecoins in the country. Secondly, there is a risk that the stablecoin could lose its peg in the event of significant volatility in the cryptocurrency industry. Lastly, unlike stablecoins such as Tether and USDC, USDe is not backed by fiat currency. Instead, its developers have described it as a “delta-neutral synthetic dollar backed by assets outside the banking system.” Its stability is achieved by hedging the spot assets’ delta during the minting process.
Looking at Ethena’s price forecast, the hourly chart indicates a strong bearish trend since reaching a peak of $1.0800 last week. It 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 also moved from the overbought level of 75 to the current 30. Consequently, the path of least resistance for the token appears to be bearish, with the next significant level to monitor being $0.6550, its lowest swing on March 16th.
