Tron’s native cryptocurrency TRX delivered an impressive weekly rally despite the market wide sell-off that has taken place in the last 4 days. However, it looks like TRX might be about to give into the selling pressure given the strong pullback it registered in the last 24 hours.
TRX rallied by roughly 43% from its weekly low of $0.061 on 1 May to its weekly high to its weekly high of $0.089. It traded at $0.082 at the time of writing, which means tanked slightly from its weekly top, but on the plus side, it is still holding on to most of its weekly gains.
TRX’s price action indicates that there has been a lot of profit-taking near its descending support line. This is evident by the pullback wicks in its candlesticks in the last 4 days, and this will likely allow the price to cool off after the robust weekly rally.
TRX’s Money Flow indicator has so far registered significant outflows ever since it reached its weekly high. The RSI indicator is currently dropping out of its overbought zone, while the DMI suggests that the bears are losing their momentum.
Will TRX continue rallying or seek more downside?
TRX’s performance will depend on the level of demand in the market. For example, its strong rally that defied the prevailing bearish market conditions was courtesy of the USDD algorithmic stablecoin’s launch. TRX is tied to USDD’s minting mechanism, hence the strong demand volume in the last 7 days. It also aligned with a strong market cap increase during the same period.
Source: Santiment
A price cool down is expected in the short-term after a strong uptick. However, TRX’s level of demand will likely be heavily to USDD demand of the market. For example, more TRX will be required to mint more of the new stablecoin if the USDD demand goes up. Similarly, a market rally in the next few days would likely lead to less demand for the stablecoin.
A look at USDD’s volume reveals that it registered a strong uptick on 5 and 6 May before tapering out. However, its market cap continued to increase and is currently in its highest level at just over $228 million. This suggests that despite TRX’s growing selling pressure, more TRX is being taken out of the market to mint USDD.
Source: Santiment
TRON revealed that it has already collaborated with multiple DeFi partners since the stablecoin launch. More than $60 million worth of USDD has already been locked in liquidity protocols. USDD is off to a healthy start and more will likely continue being minted. This means TRX is set to enjoy some healthy growth especially in the mid to long term.
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