Crypto Crash: Ethena’s USDe Freaks Out, Then Bounces Back – Here’s What Happened!

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Markets

What to know:

  • Ethena’s USDe stablecoin briefly forgot how to peg itself to the dollar, dropping to 65 cents on Binance. It was all part of a massive crypto sell-off triggered by Trump’s tariff tantrum with China.
  • USDe managed a dramatic recovery, and Ethena Labs assured the masses that the mint and redeem functions were working just fine, thank you very much, with the stablecoin still basking in the glow of overcollateralization.
  • The crypto world was rocked, with Ethena’s governance token, ENA, plunging 40%, only to perform its own miraculous rebound. Binance, ever the vigilant overseer, promised a thorough review of the affected accounts and possible compensation. Because who doesn’t love a good “we’re investigating” statement?

Picture this: Ethena’s USDe, a so-called “stable”coin, briefly had a panic attack and lost its precious 1:1 dollar peg during a market freefall, which was sparked by U.S. President Donald Trump’s big-mouth tariff announcement aimed at China. Nothing like a little global trade chaos to send everything into a tailspin.

On Binance, USDe tumbled to a heart-stopping 65 cents, making everyone wonder if they’d woken up in an alternate universe. But don’t worry, the stablecoin found its way home and was back to its dollar equilibrium in no time. How? Well, there was a whole lot of drama in the crypto world, as $19 billion in liquidations went down faster than you can say “liquidate.”

USDe, the yield-bearing hero that promises a 5.5% return (because who doesn’t love a good return on a stablecoin, right?), is backed by a mix of crypto assets and employs a basis trade strategy. Translation? It’s like betting on the gaps between spot and futures markets. And sometimes those gaps are giant craters.

Thanks to Trump’s surprise tariff bombshell, the market saw investors rushing to shiny, safe assets like gold and U.S. Treasuries. Because obviously, cryptocurrencies are much less fun when people start thinking about actual security. 🧐

Crypto economist and self-proclaimed market sage Alex Krüger pointed out that USDe’s sudden drop was a bit of an overreaction-tokens that were not as liquid on centralized exchanges (read: not as popular) “didn’t suffer as much” and some even bounced back like they were just pretending to fall in the first place. 🌪️

As the exchanges like Binance and Bybit updated prices closer to real-time (because they’re cool like that), lending platforms like Aave were a bit more chilled about the whole situation since they had USDe pegged at $1. Nice and neat, no surprises there!

Ethena Labs, in a show of corporate reassurance, took to social media to tell everyone to calm down. They assured us that USDe was still over-collateralized (so you know, it’s not all doom and gloom), and that the mint and redeem functions were humming along like nothing ever happened. Smooth sailing, folks!

They also mentioned something about perpetual contracts trading below spot prices, which, if you’re not deep into crypto lingo, basically means they’re still working on turning a profit from the chaos. Gotta love that silver lining. 💸

In the aftermath, Binance promised to “review” the accounts affected by this wild ride and maybe throw in a little compensation. Because nothing soothes the sting of a 40% drop in a governance token like the promise of a refund, right?

As for ENA, Ethena’s governance token, it didn’t take the hit too well, plummeting 40% during the sell-off, before, of course, bouncing back. It’s now down a more “manageable” 25% in the last 24 hours. Such is life in crypto. 🎢

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2025-10-11 23:29