Tron price is attempting to bounce back even as the USDD stablecoin continues losing its peg. The TRX token is trading at $0.6170, which is about 32% above last weekend’s low of $0.0466. Its market cap has dropped to $5.6 billion, making it the 13th biggest coin in the world.
Tron had one of the best performance in May this year even as other cryptocurrencies plummeted. This performance was mostly because of Tron’s successful launch of USDD.
USDD is a stablecoin that is a clone to Terra’s UST stablecoin. Unlike other mainstream stablecoins like Tether and USD Coin, USDD is not backed by any liquid assets. Instead, it is a stablecoin that rebalances based on the market’s arbitrage.
In the past few weeks, investors have been concerned about the health of algorithmic stablecoins. These concerns accelerated last week after USDD lost its peg of $1.
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Today, USDD is trading at $0.96, which is significantly below $1. This price is about 4% above the lowest level during the weekend. Therefore, there are concerns about whether USDD will become the next stablecoin to collapse.
Behind the scenes, the DAO governing the coin has been hard at work. Last week, they sold Tron worth more than $2 billion to build its reserves. And today, the team announced that it had acquired 10 million USDD on Tron’s ecosystem.
In a statement, the DAO noted that USDD had a 320% collateralization rate. The assets held in this fund are USD Coin, Tron, Bitcoin, and Tether. Still, while the developers have done well to stabilize the coin, there are concerns about how it will perform in the long term.
Tron price is also struggling as the total value locked in the ecosystem fall. According to DeFi Llama, the total value locked in the ecosystem has dropped to $4 billion.
Tron price prediction
The daily chart shows that the TRX price crashed hard during the weekend. It managed to move below the important support at $0.04926, which was the lowest level in July last year.
Now, the coin has made a steady recovery and is approaching the lower side of the ascending channel. This price action is in line with the break and retest pattern, which is usually a bearish sign.
Therefore, there is a likelihood that the bearish trend will continue in the coming weeks. The next key support to watch will be at $0.0492.