Binance’s $24M ENA recovery effort – Can Ethena extend its 16% rally?

Following the Binance hacking incident, Ethena [ENA] fell to a low of $0.16. The altcoin crashed as investors grew concerned about Ethena and Binance’s extended partnership, especially in the Real-World Assets (RWA) sector. 

However, the slip proved short-lived as ENA bounced back and flipped the $0.19 resistance. At press time, Ethena was trading around $0.193, up 3.7% on the daily charts.  However, the Spot Volume fell 55%, reflecting reduced market activity.

Binance buys $24M in recovery effort

After Binance was hacked, the attacker stole 217.5 million ENA, worth $33.9 million, and dumped all the stolen tokens.

This prompted Binance to enter recovery mode and begin purchasing back stolen ENA. According to Lookonchain, Binance has been aggressively buying ENA through market channels and OTC deals.

The exchange seems to have bought a significant share of tokens from Ethena via  OTC deals. Under the arrangement, Ethena deposited 128.63 million ENA worth $24 million.

Still, the purchase has yet to cover the total amount of tokens stolen during the hack.  Moreover, such purchases ensure the bought supply stays off the order book, thus minimizing impact on price.

Even more so, it shows Binance’s commitment to resolving the issue as quickly as possible. This is key to restoring market confidence and also the exchange’s reputation.

Spot market shows optimism

Interestingly, it seems the market crash did not prompt investors to dump on the spot. Instead, a significant share of ENA has left the exchanges since then. 

Over the past 24 hours, for example, over $91 million in ENA flowed out of exchanges. Over the last three days, the token recorded over $258 million in exchange outflows.

Such massive outflows suggest two possible things. Firstly, increased dip buying as investors deployed capital to accumulate at a discount.

Secondly, investors withdrew their assets from exchanges into cold storage or DeFi, especially amid fears of future security threats.

Can the recovery hold?

Ethena has held firm and responded strongly to the market-wide recovery effort. This bullish strength likely stems from Binance purchases and reduced incentives for spot holders to sell.

In fact, Stochastic RSI confirms this strength, having formed a bullish crossover and risen to 48 as of writing.

A crossover indicated strong upside momentum, driven by increased buying pressure. Still, Stoch remains within the bearish zone, and a flip above 50 will confirm the trend reversal.

If these conditions hold, Ethena will likely flip $0.21 and pre-hack levels. However, if the attempt to hold fails, ENA is likely to retest $0.18. 

Final summary

• Ethena deposited 128.63 million ENA, worth $24 million, as Binance continues to recover stolen funds. 
• Ethena bounced back strongly, rising 16% from the hack low to $0.193 at press time.