Since the significant liquidation event on October 10, Ethena's synthetic dollar, USDe, has experienced a drastic reduction in its market cap, plummeting from nearly $14.7 billion to approximately $6.4 billion in just over two months. Analysts attribute this decline to a "sharp loss of confidence" in synthetic collateral structures amidst a broader crypto market downturn that erased around $1.3 trillion in total market value, representing nearly 30% of the market capitalization at that time.
Following the crash, USDe briefly lost its peg, dropping to around $0.65 on Binance, though founder Guy Young clarified that this discrepancy was due to an internal oracle issue rather than flaws in the stablecoin's mechanics. During this tumultuous period, USDe managed to maintain normal minting and redemption operations, with about $2 billion redeemed within 24 hours across various decentralized finance platforms.
Moreover, the overall cryptocurrency market has seen a significant slowdown in activity, with trading volumes decreasing by approximately 50% post-crash. Additionally, US-listed spot Bitcoin exchange-traded funds have recorded net outflows nearing $5 billion since late October. Analysts indicate that this market retreat is more a result of regulated capital pulling back than retail investors capitulating.