Arthur Hayes, in his latest essay <em>Situationship</em>, says Ethena is a struggling stablecoin project that could easily 5-10x in the coming months. He acknowledges the lack of a buyback mechanism but deems it negligible given Ethena's position as the sixth-largest USD stablecoin. The bigger problem, he argues, is that falling bitcoin basis yields have pushed USDe returns close to Treasury bill levels. This makes staking synthetic dollars into USDe unattractive, since users take on centralized exchange counterparty risk and smart contract risk. This, he says, explains why USDe's circulating supply has dropped 75% from its peak and ENA is down over 90%. Hayes argues that a small increase in dollar liquidity could lift bitcoin, raise basis yields, and drive significant inflows into USDe. He expects ENA to need little to recover, calling it a potential quick 5x investment in the coming months. The positive view comes with Hayes's own accumulation: on-chain monitoring data shows he has been buying ENA since August, with cumulative purchases of 22.64 million ENA, worth roughly $2 million as of August 6.
Arthur Hayes, in his latest essay Situationship, argues that Ethena, a stablecoin project going through a difficult phase, could easily 5-10x in the coming months. He acknowledges the project lacks a buyback mechanism but says this can be overlooked since Ethena remains the sixth-largest USD stablecoin by circulating supply.
The real issue, he writes, is that falling bitcoin basis yields have pushed returns on USDe close to Treasury bill levels. Staking synthetic dollars into USDe means taking on counterparty risk at centralized exchanges and smart contract risk for little extra gain. That, he says, is why USDe's circulating supply has dropped 75% from its peak and why the ENA token is down more than 90%.
Looking ahead, Hayes argues that even a small increase in dollar liquidity could lift bitcoin prices, which would boost basis yields and pull significant capital into USDe. He says ENA needs little to shake off its slump, making it a potential quick 5x investment in the next few months.
Separately, on-chain monitoring data shows Hayes has been buying ENA heavily since August. As of August 6, his cumulative holdings reached 22.64 million ENA, worth about $2 million.
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