USDe, a cryptocurrency issued by Ethena, has fallen below its intended value as investors express doubts about the stability of similar digital currencies.

USDe Depeg and Market Reaction

Ethena’s synthetic dollar, USDe, lost its peg to the U.S. dollar, falling to $0.65 on Binance. This event, coupled with a broader market selloff, severely impacted investor confidence in the stablecoin. The depeg happened shortly after President Trump announced significant tariffs on Chinese exports, triggering a market panic. Liquidations across the crypto market exceeded $19 billion, affecting over 1.6 million traders.

Bitcoin's Price Decline

Bitcoin’s price plummeted below $110,000, representing a drop of over 14% from its previous high. The speed of the crash overwhelmed exchanges, hindering accurate data recording. Experts suggest the next support level for Bitcoin lies at $100,000, a break of which could signal the end of the bull run. Traders are positioning for further losses, reflected in the options market.

Ethena’s Model and Token Impact

Ethena’s model, relying on a basis trade strategy to generate yield, faltered due to market conditions and collapsing funding rates. The company’s governance token, ENA, experienced a substantial decline of 43%. Unlike traditional stablecoins backed by U.S. Treasury bills, USDe's reliance on crypto strategies left it vulnerable during periods of high market volatility.