YEREVAN (CoinChapter.com) — The recent excitement around the potential approval of a spot ether ETF by the SEC has led to a significant surge in Ethena’s synthetic dollar cryptocurrency, USDe. The market cap of USDe increased by $100 million in just three days, reaching $2.6 billion from $2.45 billion on May 20, 2024. This growth is directly tied to increased Ethereum open interest and rising perpetual funding rates across the market.

Ethena’s Staking Yields Soar, Ethereum Interest Hits New Highs

Ethena’s USDe staking yield has become more appealing to investors, jumping from 27.55% on May 14 to 37.2%. This sharp increase is due to Ethena staking ETH and earning a funding rate for opening short derivative positions. Investors benefit from these funding fees paid by traders holding long positions in futures derivatives markets, driving up the value of USDe.

The optimism about the SEC’s potential approval of a spot ether ETF has also led to a sharp rise in Ethereum open interest on exchanges. On May 20, Ethereum’s open interest stood at 2.8 million ETH. This figure has since risen by 10% to 3.1 million ETH, amounting to about $11.58 billion. This represents an all-time record high in open interest.

Ethereum Open Interest Soars Across All Exchanges. Source: CryptoQuant

Traders in the perpetual futures market have aggressively opened long positions, expecting a positive outcome from the SEC. Ethena’s founder, Guy Young, noted, “The increase in both open interest and funding is and will continue to be a large tailwind for Ethena.”

Ethena’s Governance Token ENA Shows Mixed Performance

While USDe has shown impressive growth, Ethena’s native governance token, ENA, has experienced some fluctuations. ENA has dropped 5% in the past 24 hours but has increased by 13% over the past seven days, trading at 83 cents.

Ethena ENA Price Chart Reflects Recent Performance. Source: CoinGecko

Despite the recent dip, ENA’s overall weekly growth indicates a positive trend. Investors continue to monitor its performance closely, especially in the context of the broader market movements driven by the Ethereum ETF news.

Analysts and Market’s Reactions

Bloomberg ETF analysts Eric Balchunas and Jeff Seyffart have played a significant role in this surge. They recently increased their odds of the SEC approving a spot ether ETF to 75%. This bullish outlook has contributed to the market’s positive sentiment.

The overall market reaction underscores the interconnectedness of various factors driving the growth of Ethena’s USDe. Increased open interest, higher funding rates, and the anticipation of the SEC’s decision have all played pivotal roles in this development.

The post Ethena’s USDe Market Cap Surges $100M in Three Days appeared first on CoinChapter.

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Filed under: Bitcoin - @ May 23, 2024 1:13 pm