Ethena Faces $5.72B Outflows: Is ENA's Recovery at Risk?
Key Insights
Factors Behind Ethena's Decline
A mix of token unlocks, reduced revenue, and significant investor sell-offs are contributing to the downward pressure on ENA's price.
Impact of Investor Actions on Ethena
Net outflows amounting to $5.72 billion, alongside declining inflows, have weakened Ethena's Total Value Locked (TVL) and overall market sentiment.
Ethena [ENA] has seen a notable market decline, with the asset dropping by 10% recently. Investors are recognizing the bearish trend, increasing the likelihood of further declines.
$5.7B Sales Hit ENA
On-chain data indicates a growing disinterest among investors. Over a 30-day period, investors have been selling their assets as tokens are unlocked. From October 11 to November 12, total net outflows reached $5.72 billion, impacting Ethena's TVL, currently at $8.581 billion.
AMBCrypto attributes this decline to a sharp drop in Ethena's earnings, with average daily earnings falling from $109,462 in Q3 to $8,987 in Q4.
Maria Carola, CEO of StealthEx, highlighted macroeconomic factors affecting ENA's earnings and cautioned about potential worsening conditions. "Until inflation indicators and the Federal Reserve's policy guidance offer clearer direction, high-beta assets like ENA are likely to remain under near-term pressure."
Unlocks and Revenue Decline Pressure ENA
Ethena's recent price drop is driven by bearish market conditions. On November 8, the protocol unlocked $4.56 million worth of tokens, 0.2% of its circulating supply, alongside its S3 Airdrop distributing $149,858 daily. These unlocks add selling pressure as the market recovers. Meanwhile, Ethena's protocol revenue has sharply declined, further driving downward momentum.
Recent reports indicate Ethena's revenue has plummeted, recording $1,817 in the past day and $11,849 over the past week. A drop in protocol revenue often signals reduced user activity, leading to lower on-chain transactions, which have declined to 24,500 during this period.
Decreased Inflows and Increased Selling
DeFiLlama reports a sharp decline in USD inflows into ENA, dropping to a negative $46 million, confirming a sell-off trend among on-chain investors. Spot investors are also selling ENA holdings, with a total net outflow of $569,000 from centralized exchanges.
This marks a rare period of weekly outflows for ENA. The average sell-off across major liquidation events shows $3.915 million worth of assets sold. Continued market dominance by sellers could lead to similar sell-off levels, adding pressure to ENA's market outlook.