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.
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.
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.
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.
