Tron (TRX) Bucks Crypto Market Trend with 16% Breakout

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Published: May 7, 2022, 01:25 UTC

The launch of Tron's Decentralized USD (USDD) and risk-free interest rates of 30% per annum have driven demand for TRX amidst choppy market conditions.

Key Insights:

It was a bullish Friday session for Tron (TRX), with TRX rallying by 15.8%.
Market reaction to the launch of USDD, a new TerraUSD (UST) competitor delivered the upside.
TRX technical indicators are bullish, with TRX sitting above the 50-day EMA.

On Friday, Tron (TRX) surged by 15.8%. Reversing a 13.7% slide from Thursday, TRX ended the day at $0.0863.

The upside came despite a bearish session for the broader crypto market, with market angst over inflation and Fed monetary policy weighing on riskier assets.

News of Tron launching TerraUSD (UST) Competitor USDD, with promises of 30% APY, delivered strong support.

Tron Launches USDD with the Promise of 30% APY

On Thursday, Tron launched its heavily anticipated decentralized USD (USDD) stablecoin.

USDD will be pegged to the US dollar 1:1 and will follow a similar pegging mechanism to Terra Lab’s TerraUSD (UST).

A USDD fall below $1.0 would enable traders to swap USDD for $1.0 equivalent of TRX, reducing the supply of USDD to restore the $1 peg.

If USDD rises above $1, traders can exchange $1 of TRX for USDD to increase supply and restore the peg.

Both instances are arbitrage opportunities, where traders can immediately sell TRX or USDD to take profit.

Tron intends to raise a TronDAO Reserve of $10 billion.

According to the USDD white paper,

“the TronDAO Reserve will set its basic risk-free interest rate to 30% per annum and facilitate other decentralized and centralized organizations that accept USDD to implement consistent interest rate policies.”

The launch of USDD and the allure of a risk-free interest rate of 30% per annum have driven demand for TRX.

TRX Price Action

At the time of writing, TRX was up by 2.03% to $0.08804. A bullish start to the day saw TRX hit a morning high of $0.0885.

A move through the morning high would bring $0.10 into play.

Technical Indicators

TRX will need to avoid the day’s $0.0825 pivot to target the First Major Resistance Level at $0.0922. TRX would need broader market support to return to $0.090.

In the event of an extended rally, TRX could test the Second Major Resistance Level at $0.0982 and resistance at $0.10. The Third Major Resistance Level sits at $0.1139.

A fall through the pivot would bring the First Major Support Level at $0.0765 into play. Barring another extended sell-off, TRX should avoid sub-$0.070. The Second Major Support Level sits at $0.0668.

Avoiding the pivot would be key to supporting further upside.

Looking at the EMAs and the 4-hourly candlestick chart (below), the signal is bullish. TRX sits above the 50-day EMA, currently at $0.0747. This morning, we saw the 50-day EMA pull away from the 100-day EMA. The 100-day EMA moved away from the 200-day EMA; TRX price positive.

Avoiding sub-$0.80 and the 50-day EMA would support a continued run at $0.10.

Indicators send a bullish signal with TRX well above the 50-day EMA.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.