Will Ethena's USDe Growth Push ENA Higher?

Ethena's (ENA) price has rebounded after a buy signal was flagged by analysts, with trading patterns indicating renewed short-term momentum. The rally is driven by the growth of Ethena's USDe stablecoin, which has reached $11.6 billion in supply after the GENIUS Act approval. However, analysts warn that an unwind of Aave's $6.4 billion Ethena-linked exposure could trigger cascading liquidations, pressuring ENA's price. The foundation is conducting a $260 million buyback program, but ongoing unlocks and the effectiveness of the buyback program depend on sustained USDe revenues.

Ethena's native token ENA has staged a notable recovery, surging back towards $0.74 following a prolonged downtrend. This rebound came on the heels of a buy signal flagged by analysts, with trading patterns suggesting renewed short-term momentum. Market data indicates that ENA has climbed 2.2% in the past week, now holding a $4.87 billion market cap [1].

The rally can be attributed to the growth of Ethena's USDe stablecoin, which has ballooned to $11.6 billion in supply after the GENIUS Act approval. USDe's yield-bearing model, offering 6–9% APY, and integrations with platforms like Aave, Pendle, and Coinbase, have fueled rapid adoption. Currently, 55% of Ethena's assets are routed through Aave, amplifying growth but also heightening systemic risk [1].

However, analysts caution that an unwind of Aave's $6.4 billion Ethena-linked exposure could trigger cascading liquidations, directly impacting ENA's price. This concentration risk has become a significant talking point among traders monitoring the project's long-term sustainability [1].

Ethena's foundation is conducting a $260 million buyback program, purchasing approximately $5 million worth of ENA daily until September 2025. This move aims to counter dilution and provide price stability. However, the token faces ongoing unlocks, with 171.8 million ENA ($106M) hitting the market on August 5, pushing 41% of total supply into circulation [1].

Monthly unlocks, such as July's 40 million ENA release, continue to weigh on sentiment. The effectiveness of the buyback program largely depends on sustained USDe revenues, which fund the repurchases. Without consistent inflows, sell pressure could outweigh the foundation’s support [1].

For now, ENA's rebound has restored optimism among traders who see potential upside if USDe growth continues. However, the balance between buybacks and unlocks, combined with Aave exposure risks, keeps the outlook uncertain. If bullish momentum holds, analysts suggest ENA could retest resistance near $0.80, while a breakdown below $0.70 may reignite bearish pressure [1].

References:
[1] https://coindoo.com/market/ethena-ena-bounces-back-will-usde-growth-push-it-higher/