The Tron network launched the stablecoin project USDD as an “overcollateralized stablecoin” in April 2022. It means it should be less likely to drop below $1 due to the excess reserves driving its valuation. However, it was stated that the altcoin project experienced a loss of value due to the crisis in FTX.
Altcoins and stablecoins under pressure
Some whales reportedly dumped 11 million USDD to buy USDT and USD Coin (USDC). By November 8, the USDD’s fixed price of 1 dollar was insufficient. Afterwards, the price of USDD dropped as low as $0.96. Then, when we came to November 10, it rose to $ 0.98. However, the decline in altcoin brought doubts.
The selling pressure was seen more broadly in the USDD liquidity pool on Curve’s decentralized finance protocol. As of November 10, the pool was largely unstable. However, around 82.50 percent USDD and the rest were in USDT, USDC and DAI stablecoins.
Will Tran CEO support?
Tron founder Justin Sun believes that Alameda Research, led by FTX CEO SBF, has issued its altcoins to avoid bankruptcy. Apart from that, Sun speculates that the whale selling USDDs may be the company itself. Alameda’s balance sheet is 50 percent FTT. FTX’s altcoin project FTT has lost more than 90 percent of its value in recent times. On November 9, Tron founder Justin Sun shared on his Twitter address. Sun shared the following statements:
I think Alemeda sold their USDD to meet the liquidity of the FTX exchange. Looking at the pool it has now returned at a healthy rate.
Are there any miscalculations?
USDD is issued by the serving Tron DAO Reserve (TDR). However, TDR works to keep USDD fixed in case of any sales shock. TDR’s priority is primarily responsible for selling the collateral. Theoretically, USDD seems adequately supported by a $2 billion crypto collateral pool in the form of BTC, TRX and USDC. It is also reported that reserves outweigh the stablecoin supply by 283 percent.
Almost all stablecoin collateral value in TDR’s reserves is in the TVL and Tron ecosystem. It is staked and yields returns on JustLend, the largest lending protocol in the Tron ecosystem. Meanwhile, 99 percent of TRX collateral is locked in a “stakeing governance” contract. Apart from all this, it appears that TDR incorrectly included over $725 million in burnt TRX as collateral. Overall, DAO reserves hold approximately $600 million worth of USDC and $236 million worth of BTC. In other words, a coverage ratio of almost 113 percent versus the stated 283 percent.
Bitcoin and altcoin projects on the decline
USDD’s collateral rate is likely to fluctuate further due to dips in BTC and altcoin TRX. In particular, the price drop in BTC affected the entire market. Altcoins in general continue to decline. The Alameda-FTX crisis has spread to all altcoins, especially the leading cryptocurrency BTC. Bitcoin price fell as low as $16,500 on Nov. TRX, on the other hand, erased about 12 percent of its valuation over the same period. TRX price continues to trade at $0.05602, down 5.38 percent.
Tron’s native altcoin, TRX, has its 200-week exponential moving average (EMA) around $0.052. It is also near the 0.236 Fib line near $0.055. It sees a break below the long-standing support confluence. According to analysts, TRX is likely to push for a long decline towards the $0.022 to $0.030 price range. This space was effective as a consolidation channel from August 2020 to January 2021 and from January 2019 to July 2021. He also acted as support between February and November 2018.
As we have reported as Kriptokoin.com; At the same time, Bitcoin entered the breakout phase of the dominant inverse-cup pattern. Currently, $14,000 is seen as its primary downside target.
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