- Tron price has been in a strong bearish trend.
- It tumbled to the lowest point since January.
- The USDD stablecoin has lost its peg.
Tron price has plummeted sharply as investors focus on its algorithmic stablecoin known as USDD. The TRX token has slumped to a low of $0.053, which is the lowest it has been since January this year. It has fallen by more than 42% from its highest point in May this year, bringing its total market cap to $5 billion.
USDD tumbles
Tron had a relatively strong performance in May as its total value locked (TVL) of its ecosystem surged. It also rose as its stablecoin, USDD saw its market cap jump from 0 to over $700 million.
Now, a month after launch, the USDD stablecoin is unraveling as its price moves below $1. According to CoinGecko, the stablecoin is trading at $0.98, which is slightly below the important level at $1.
As I have warned before, USDD was risky all along considering what happened with other algorithmic coins like Dei, Neutrino, and Terra USD.
The risk is that these stablecoins depend fully on market conditions. This is unlike the leading stablecoins like USD Coin and Tether which are backed 1:1 with the US dollar. Therefore, in case of a bank run, it is almost impossible to support their prices. In my view, we could see a repeat of what happened with UST.
Here’s how to buy Tron
Meanwhile, Justin Sun has committed to intervene in the market by adding over $2 billion to its reserve. In a statement, Tron DAO said that it had added over $650 million in USD Coin to its reserve.
Further, in another statement, the organization said that it bought an additional $500 billion worth of USDC, bringing the coin’s collateralization to 310%. These new deposits will likely help to calm the market amid the rising volatility.
Tron price prediction
The daily chart shows that the TRX price has been in a strong bearish trend in the past few days. The coin managed to move below the lower side of the ascending channel that is shown in black. The 25-day and 50-day moving averages have formed a bearish crossover pattern while the RSI has slumped to the oversold level.
Therefore, at this point, the outlook is extremely bearish, with the next key level to watch being at $0.05. The situation will likely worsen as the Fed prepares a massive 0.75% rate hike.
