Ethereum ETF Hype Boosts Ethena’s USDe Market Cap by $100 Million

SEC approval speculation for a spot ether ETF boosts Ethena’s USDe market cap by $100 million and staking yield to 37.2%.

The anticipation surrounding the potential approval of a spot ether exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC) has ignited significant growth in Ethena’s synthetic dollar cryptocurrency, USDe. Over the past three days, USDe’s market cap has soared by $100 million, climbing to a new total of $2.55 billion, according to data from CoinGecko. This increase reflects a 4% growth from its previous valuation of $2.45 billion on May 20.

Ethena ($USDe) Market Capitalization in the Last 7 Days.
Ethena ($USDe) Market Capitalization in the Last 7 Days. Source: CoinGecko

The market excitement over the possible SEC approval has driven a surge in Ethereum open interest and perpetual funding rates across various exchanges. These ETF developments have directly contributed to the rising staking yield of USDe, which has jumped to 37.2%, up from 27.55% on May 14. Ethena’s USDe staking yield benefits from the rewards generated by staking ETH and the funding rate earned through short derivative positions. Essentially, traders with long positions in futures derivatives markets pay funding fees to those holding short positions like Ethena.

As the odds of SEC approval for a spot ether ETF increased, Ethereum open interest grew significantly, reflecting heightened investor activity and market optimism. The total number of long and short positions on derivative exchanges, known as open interest, reached an all-time high of 3.1 million ETH, valued at approximately $11.58 billion. This represents a 10% increase from the 2.8 million ETH open interest recorded on May 20.

Impact of Market Dynamics on USDe Staking Yield

The spike in open interest and perpetual funding rates has made Ethena’s USDe staking yield more attractive to investors. Ethena’s strategy involves earning rewards from staking ETH and capturing funding fees from short positions. When market participants, anticipating higher prices, aggressively open long positions, the funding fees paid to short position holders like Ethena increase, boosting the staking yield.

This dynamic has been a significant factor in the recent growth of USDe’s market cap. The increased staking yield has drawn more investors to USDe, further amplifying its market value. Ethena’s homepage reports that the current staking yield stands at 37.2%, a substantial rise from the 27.55% yield observed just a few days earlier.

The enthusiasm around the SEC’s potential approval of a spot ether ETF has also influenced other market metrics. For instance, average perpetual funding rates across the market surged from below 7% on May 20 to over 35% within hours. This rapid increase reflects the heightened demand and market activity driven by the ETF approval speculation.

Ethena’s ENA Token Performance Amid Market Fluctuations

While USDe has experienced significant growth, Ethena’s native governance token, ENA, has shown mixed performance. Over the past 24 hours, ENA has declined by 5%, yet it has achieved a 13% increase over the past week, currently trading at 83 cents according to CoinGecko. This fluctuation highlights the volatility and investor sentiment shifts within the cryptocurrency market.

The broader implications of the potential SEC approval extend beyond just Ethena and USDe. The overall market sentiment around Ethereum has become increasingly bullish, with traders expecting a positive price movement if the ETF gets the green light. This optimism has spurred increased activity in the futures market, as evidenced by the record high in Ethereum open interest.

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