Ethena’s USDe Loses $8.3 Billion After October Crypto Crash
Ethena’s synthetic dollar, USDe, has experienced around $8.3 billion in net outflows since a major crypto market liquidation on October 10, reflecting declining confidence in leveraged and synthetic collateral structures. The event triggered a shift from a bull market to deleveraging, erasing roughly $1.3 trillion, or 30%, in total crypto market value. USDe relies on synthetic collateral and hedging, not traditional fiat reserves, making it vulnerable to shifts in sentiment. Its market cap fell from $14.7 billion to $6.4 billion in just over two months. After the crash, USDe briefly lost its dollar peg on Binance, dropping to $0.65 due to an internal oracle error at the exchange, not an underlying protocol or collateral problem. USDe minting and redemptions continued as normal, with $2 billion redeemed in 24 hours. Broader crypto activity has slowed, with trading volumes down 50% and about $5 billion in net outflows from US-listed spot Bitcoin ETFs. The retrenchment is attributed to a pullback by regulated capital rather than retail investors, and Bitcoin has started trading as a risk asset, decoupled from equities and gold.
