🧘♂️The Next Big Thing
Market Meditations | April 22, 2022
It’s been a busy week and it seems like algorithmic stablecoins are all the hype! Could they be the next big thing? Let’s consider some key price action and take a closer look at this hot new trend.
- ETH and LUNA Technical Analysis
- Latest on TRON Network
- Updates from NEAR Protocol
⏰ Top Headlines
- MetaMask stops working as Infura suffers another service outage
- Polygon launches ‘Supernet’ chains, pledges $100M to Web3 developers
- Twitter to test out Stripe’s newly added support for USDC payments
- Emmanuel Macron on crypto: ‘I don’t believe in a self-regulated financial sector’
? LUNAr ETHclipse
Macro Structure: No big updates since last time.
Key Support: Remains $3k.
Key Resistance: Remains $3.6k.
Looking Forward: All the action is at the key support and we have the 100 Day Moving Average just below that. After this, we have the $2.4k support level.
Macro Structure: As predicted, when the $100 level broke, we got a breakout, retest and then a 20% breakout from that level.
Key Support: Price has since retraced to key support at $80 confluent with the 100 Day Moving Average.
Key Resistance: $100. Also a key psychological level.
Looking Forward: Price will likely range between support and resistance. Above $100, aggressive move to the upside. Below $80, similar aggressive move to the downside.
?The Year of the Algo
Since the creation of USDT, FUD has filled the headlines, creating doubt in the minds of investors about the backing of the stablecoin. This led to the idea of algorithmic stablecoins. As opposed to trusting a private company, users could trust code. It took a while to catch on, but when it did UST, one of the first successful algorithmic stablecoins, grew like wildfire and was implemented on various chains. UST has enjoyed so much success, that algo stablecoins are popping up everywhere including the TRON network.
- Justin Sun recently announced that Tron will be launching its own algo stablecoin native to the TRON network.
- TRX, the TRON token will be used to keep USDD pegged to the US Dollar. Anytime that the peg of USDD falls below one dollar, users can send $1 worth of USDD to the system in exchange for $1 worth of TRX. If the price is above $1, users can send $1 worth of TRX in exchange for $1 worth of USDD.
- The stablecoin will be managed by the TRON DAO.
- The TRON DAO will also maintain custody of $10 billion of “a highly liquid” reserve asset and offer an interest rate of 30%.
- If this all sounds eerily familiar, that is because it is not so dissimilar to Terra’s algorithmic stablecoin UST. Do Kwon seemed to approve, tweeting about Sun’s announcement and saying that ‘decentralized communities deserved decentralized money.’
FRAX recently gained traction and headlines after the creation of the 4pool containing USDT, USDC, UST & FRAX. Even NEAR protocol is launching an algo stablecoin but many investors are still skeptical about the ability of these algo stablecoins to maintain their peg and worry that a real bank run could crash the market. More about NEAR in the next section…
? Another Day, Another Stablecoin
NEAR Protocol ($NEAR) is a development platform built on a sharded, proof-of-stake, layer-one blockchain designed for usability.
- It has been the recipient of lots of positive attention in the last few months and now stands as the 17th largest cryptocurrency with a market cap of $11.2 billion.
- The protocol recently raised $350 million in a funding round led by Tiger Global, FTX Ventures as well as other big-name investors.
- The Block reported earlier this month that Near Protocol was set to release a stablecoin known as $USN.
- The article stated that there was no concrete release date but that there had been strong rumours suggesting that users could earn a 20% yield, similar to UST on Anchor.
- On April 20th 2022, Decentral Bank tweeted “$USN is NEAR” teasing a release date of April 2◾ (meaning a launch between April 21st to 29th).
- Although there is now a confirmed date for the release of $USN, there still isn’t any further information on the rumoured high-yield stablecoin protocol.
As the crypto market continues to mature and further regulation is imposed, the stability, acceptability and usability of different stablecoins will be key to mainstream adoption.
- Watch our How to Get Rich Trading Crypto Course if you struggled with today’s technical section.
- Read the following Technical Analysis guides for more insight:
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