The crypto market had a wild Friday, hitting some projects hard. Ethena’s USDe, a big player in stablecoins, briefly lost its footing. It dropped sharply on Binance, falling to just 65 cents. This happened during a massive sell-off that rattled the entire crypto world.
This wasn’t just a minor blip. The market saw nearly $20 billion wiped out in liquidations over 24 hours. A big reason for this chaos was a sudden announcement from former President Donald Trump. He spoke about imposing a huge 100% tariff on goods coming from China. This news sent a wave of panic through investors.
🚨 CAOS EN CRIPTOMONEDAS 🚨
La stablecoin USDe de Ethena perdió su paridad con el dólar, cayendo a 65 centavos en Binance.
El colapso cripto ha generado liquidaciones de 20.000 millones en 24 horas.
Los aranceles del 100% de Trump a China avivan el pánico inversor.
Más de 1,6… pic.twitter.com/uM7gvSMmYH
— Diario฿itcoin (@Blaze Trends)
USDe is the third-largest stablecoin. It has a market value of $13 billion. Ethena calls it a “synthetic dollar.” They promise holders a 5.5% return. However, its design, which uses something called a “basis trade,” became a weak spot. This strategy tries to profit from price differences between spot and futures markets. While it works well when funding rates are high, a market crash makes these rates plunge, putting the stablecoin’s stability at risk.
Market data showed the token, designed to stay at $1, plunged during the broad downturn. CoinGecko reported USDe fell to $0.9572 later that afternoon. This reflects the extreme market volatility and investor fear. “Even a short break from the peg can shake the market,” said Rachael Lucas, an analyst at BTC Markets, quoted by Bloomberg. “Traders rely on them for liquidity, loans, and collateral. Any loss of trust can trigger liquidations and spread volatility.”
Trump’s Tariff Talk Ignites Market Panic
The sudden jolt came from Trump’s statement. It sparked fears of a worsening trade war with China. Investors then rushed to safer assets like gold and Treasury bonds. This caused a domino effect across crypto. Bitcoin, the biggest cryptocurrency, lost $17,000 in one day. It dropped below $106,000, after starting the week strong at a record $126,000. Data from Coinglass shows more than 1.6 million individual traders were liquidated. Over $16 billion in long positions vanished in just 24 hours.
ENA Token Drops, USDe Recovers Swiftly
The impact also hit Ethena’s governance token, ENA. Its price fell by as much as 27% in 24 hours, according to CoinGecko. Binance, the world’s largest exchange, quickly responded. They announced a full review for affected users. They promised to look at liquidation details and appropriate compensation. “Our team is conducting a thorough review of impacted users, the details surrounding these liquidations, and appropriate compensation measures,” Binance said in a blog post.
Despite the initial scare, USDe recovered fast. It stabilized soon after the sharp drop. Ethena Labs confirmed on X that USDe is backed by digital assets, including stablecoins like USDT and USDC. They also stated it remains overcollateralized. At the close of this article, the token traded at $0.9990 on Binance. It had almost fully regained its dollar peg. CoinMarketCap data showed its price at $0.9997, with a 24-hour trading volume of $3.7 billion.
This event highlights the weaknesses of stablecoins that promise high returns. Unlike USDT and USDC, which are backed mostly by liquid assets like Treasury bonds, yield-generating stablecoins rely on more complex strategies. This incident shows how global politics can increase risks in the crypto world. The digital asset market is increasingly tied to traditional financial markets. Analysts like Lucas warn that even brief de-pegging events can erode trust. This might worsen future volatility. It’s a reminder that in crypto, stability is always a relative concept.
Sources:
Binance
Bloomberg
Coinglass
CoinGecko
CoinMarketCap
Ethena Labs on X