Ethena Fell 20% This Week After Millions in Liquidations. Is Its USDe Stablecoin Still Safe?

Ethena (CRYPTO:ENA) experienced a significant decline of 19.4% over the past week as millions in leveraged positions were liquidated. As of October 19, 2026, ENA trades at roughly $0.19, which is 87.4% below its all-time high. In contrast, Bitcoin (CRYPTO:BTC) posted a modest 0.4% gain over the same period, suggesting the selloff primarily hit Ethena.

ENA serves as Ethena’s governance token, allowing holders to vote on how the protocol operates, which means its price can fluctuate freely. With such a steep drop, holders of the USDe stablecoin (CRYPTO:USDE), designed to maintain a $1 value, raised concerns. This raises the question — did the turmoil surrounding ENA affect USDe?

Liquidations and Big Sales Drove ENA Below $0.20

ENA plummeted 12.3% to around $0.18 on October 15, driven by $8.2 million in long-position liquidations over 24 hours. Long positions profit when prices rise, and traders often borrow funds to amplify these investments. However, when prices fall sharply, exchanges close these leveraged positions and sell the underlying assets to cover losses. Each forced sale further drives prices down, creating a vicious cycle.

Large investors, known as whales, sold first. KuCoin reported that a whale sold $800,000 worth of ENA right before the release of the September Consumer Price Index, a key government inflation report. Additionally, investment firm YZi Labs transferred 1.2 million ENA, valued at around $230,000, to exchanges, a move often interpreted as a signal of further sell-offs.

While KuCoin linked the decline to the inflation report, it noted that selling pressure persisted after the data was released, and that the whale sold before it, suggesting ENA-specific selling drove the crash. Compounding these issues, an additional 171.9 million ENA, worth about $33 million at the current price, was scheduled to unlock on October 5.

We believe the price drop is unlikely to continue unchecked. Liquidations typically slow once the most heavily leveraged positions are cleared, and ENA trading above its $0.18 low signals potential stabilization now that forced sellers are mostly gone. However, whales continue to have the power to influence prices significantly.

ENA Lost $0.20 Support While Bitcoin and Ethereum Held Steady

ENA has slipped below the $0.20 mark, a level where buyers had previously entered the market. When a support level breaks, it often becomes resistance, meaning sellers may step in to cap any bounce back, limiting ENA’s recovery.

Leveraged traders have driven most trading activity. During the selloff, ENA’s trading volume surged 49%, and net flow in ENA futures was-$38 million, according to CoinGlass data. This suggests more capital exited ENA futures than entered, as traders closed leveraged positions faster than new buyers arrived.

In contrast, larger cryptocurrencies have remained relatively stable. Bitcoin gained 0.4%, trading at about $82,710, while Ethereum (CRYPTO:ETH) declined by 1.5% to around $2,431. However, ENA operates in a thinner market; thus, significant trades, such as the $800,000 sale or multiple liquidations, can heavily influence its price.

ENA’s price also reflects expectations for Ethena’s revenue, which largely depends on funding payments from leveraged traders. A decline in crypto market leverage can reduce Ethena’s earnings. Moreover, larger altcoins have also struggled, with Ethereum down 8.5% over the past month and losing ground to Bitcoin.

Ethena Protects Each USDe With a Hedged Position

USDe is designed as a synthetic dollar backed by cryptocurrencies and futures trades, rather than cash or short-term Treasuries like traditional fiat-backed stablecoins. According to Coin Metrics, Ethena supports each USDe with assets such as Bitcoin, Ethereum, or staked ETH while simultaneously holding an equal short position in perpetual futures. This hedge helps maintain USDe’s dollar value because a short position gains value when prices drop.

Perpetual futures never expire, and exchanges keep prices close to the market by requiring longs and shorts to pay each other funding fees. When funding fees are positive, longs compensate shorts, allowing Ethena to profit from this setup. Coin Metrics also notes that Ethena maintains a reserve fund to cover negative funding or unexpected losses.

However, if funding stays negative for an extended period, Ethena would incur costs to maintain its hedge, diminishing the reserves. There’s also exchange risk, since Ethena holds its short positions on external exchanges. The Bybit hack in early 2025 and a flash crash on October 10, 2025, have tested this system, and USDe hit an all-time low of about $0.93 even earlier, on October 3, 2024.

Is the USDe Stablecoin Still Safe After ENA’s Decline?

Yes, based on its price. USDe is trading at $0.9996, with a market cap of $4.68 billion and minimal movement (0.02%) over the last week. Its 24-hour trading range has fluctuated between $0.9993 and $0.9998. The sellers of ENA are factoring in a potential decline in Ethena’s business as leverage and funding income decrease. However, for now, USDe appears to be holding steady, and ENA holders are absorbing the 19.4% loss.

That answer could change if USDe trades off its $1 peg for more than a brief dip, or if its supply of about 4.68 billion tokens falls sharply, since either would mean holders are cashing out in large numbers. For ENA, a move back above $0.20 could show the forced selling is over, while more whale transfers to exchanges could push it lower.

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