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.
Cryptocurrency recovery
Tron had one of the best performances in May this year, even as other cryptocurrencies fell. This performance is mainly due to the successful launch of USDD by Tron.
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.
Over the past few weeks, investors have been concerned about the health of algorithmic stablecoins. These concerns accelerated last week after the USDD lost its $1 peg.
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 room has been hard at work. Last week they sold Tron for over $2 billion to build up its reserves. And today, the team announced that they have acquired 10 million USDD on the Tron 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’s price is also struggling as the total value locked in the ecosystem drops. According to DeFi Llama, the total value locked in the ecosystem has fallen 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 consistent 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.
