Despite the fact that the widespread tide in the crypto market is bearish, TRX, native to the Tron network, is rising in price.
The reason behind this – a high rate of burning TRX tokens, to issue USDD.
At the time of this writing, TRX is trading at $0.08, accumulating a gain of 7.16% in the last 24 hours, and 16.11% in the last 7 days.
More about USDD
Launched the initial phase just a couple of weeks ago, USDD is the new native stablecoin of the Tron network.
This is an algorithmic stablecoin, quite similar to UST. However, some key differences could make this a sustainable project.
According to Justin Sun, founder of Tron, assures that Terra’s problem was the extreme leverage used. While there were about $4 billion in reserve, UST’s market capitalization reached $18 billion.
USDD for its part, which describes itself as the most decentralized stablecoin in the world, has a roadmap that specifies how to avoid this excess leverage.
To avoid a bleed-out like the one seen on the Terra blockchain, the Tron stablecoin will have different issuance phases, each with a capitalization limit well below what the TRX token and the Tron DAO reserve hold, so that users can trust that all coins are fully backed.
How does the Tron stablecoin generate an increase in the price of TRX?
Because TRX needs to be burned to issue USDD, it is a feedback mechanism where supply decreases rapidly, as demand increases along with the adoption of this new stablecoin.
Currently, almost 7,000 million TRX have been incinerated with this mechanism, equivalent to $ 543 million.
With that capitalization, today USDD already ranks 84th in the CoinMarketCap ranking. A place without a doubt quite relevant, if we take into account that it is a currency that has just been born.
Thanks to this, TRX has also been rapidly increasing in price, taking advantage of the widespread bearish sentiment to climb up to 14th place in the crypto ecosystem ranking.
Technical analysis of TRX price
Today from the TRX vs USDT monthly chart we can observe a good technical scenario.
After defending the surrounding support zone at $0.06, now the recent buying pressure looks like it could resume the long-term uptrend.
To assure that this is so, is to rush. But the recent good behavior, is a good sign for buyers.
The most conservative would expect the downward trend line seen in the chart below to be crossed. Expecting an escape above the resistance at $0.10 would be even more reliable confirmation.
In case the support at $0.06 is lost, then the scenario would be discouraging, as it would tell us that the ongoing corrective process needs to be extended further. At the moment, this is not very likely.
All our publications are of an informative nature, so in no case should they be regarded as investment advice.
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