Stablecoin dominance slides as market cap falls to near 2-year lows: CCData
After 16 consecutive months of decline, the stablecoin market dominance has fallen to 10.3% of the total crypto market capitalization.
USDD Stablecoin Faces Possible Collapse Amid Huobi Insolvency Rumors
The bear market deepens as negative news and FUD keep popping up. The latest on the list of fear-causing information is Justin Sun’s USDD stablecoin and popular crypto exchange Huobi.
Mike Alfred, an investor serving as a board member of BTC miner Iris Energy and digital asset investment platform Eaglebrook Advisors, earlier today voiced out some warnings on USDD stablecoin and Huobi Exchange.
According to Alfred, Justin Sun shadow owns Huobi, and he is perhaps the “most erratic billionaire in crypto.” Justin has been sending a handful of billions of dollars of stablecoins around the space, including in and out of exchanges such as Binance, said Alfred. Adding, “Something huge is afoot. Withdraw all coins from unregulated exchanges.”
He also went ahead to tackle Justin Sun’s USDD stablecoin saying the algorithmic stablecoin on Tron has de-pegged and could be in the process of collapsing. “It’s code red time in crypto again,” Alfred concluded.
Following the accusations that Justin Sun appears to shadow-own Huobi, rumors of the exchange being insolvent have now begun to spread. When a tweep commented on Alfred’s post saying, “I doubt he is a billionaire.” Alfred replied that Justin cashed out $1.5 billion to fiat in the last couple of months. “He’s looting Huobi before it crashes.”
Is Huobi Really Insolvent?
Several theories have intensified Huobi’s rumor of being insolvent. It was reported yesterday that Huobi had shut down internal employee communication groups and feedback channels and is now asking employees to receive their salaries in stablecoins.
While the validation of the rumor has not been confirmed, and there have been no reports of clogging of withdrawals on Huobi yet, the conclusion of whether the exchange is solvent or not is still quite an uncertain projection.
Amid the ongoing Huobi rumors, the exchange has entered the red in trading volume over the last 24 hours. According to data from Coinmarketcap, Huobi’s 24-hour trading volume is down by over 15%, sitting at $343 billion.
Effect On USDD And The Crypto Market
As of the time of writing, USDD has de-pegged and is now trading at $0.9799 with a trading volume of $33.5 million. The Huobi native token (HT) has also fallen by more than 7% in the past 24 hours, with a trading volume of $20.5 million over the same time period.
There hasn’t been any significant drop in the global crypto market; however, should the rumor about Huobi be true and the exchange eventually crashes, there could be potential drops, particularly in altcoins. Furthermore, both Bitcoin and Ethereum seem to be in a consolidation state, almost as if they are waiting for significant news before they begin to move.
Featured image from iStock, chart from TradingView
Major stablecoins destabilized as market volatility and redemptions surge
Nearly all major stablecoins lost their dollar pegs amid the FTX saga, but most have recovered again as markets stabilize.
Tron’s stablecoin USDD loses dollar peg on suspected selloff by Alameda Research
Wallets associated with Sam Bankman-Fried’s Alameda Research could be behind the dollar de-peg, alleges Tron’s founder.
Tron Falls Sharply As Sun Scrambles To Save Stablecoin
Tron price momentum faded over the weekend, and the price has dropped by more than 40% since then. The cryptocurrency is presently having difficulty gaining traction.
Tron Falls AS USDD Depegs
TRX has dropped 19% and is now trading at $0.05, its lowest level in 15 months. In the last 24 hours, the token has also been the worst performer among the top 50 cryptocurrencies.
The token’s weakness follows the loss of the USDD algorithmic stablecoin’s dollar peg, despite founder Justin Sun’s repeated efforts to keep the peg.
In the last 24 hours, the token’s entire market valuation has dropped by nearly 1% to $701.4 million. The token has garnered comparisons to Terra’s UST stablecoin, which vanished in May due to its algorithmic nature.
USDD/USDT breaks dollar peg. Source: TradingView
Fear began as soon as the USDD’s 1:1 peg to the dollar was lost. TRX hasn’t been able to reverse the downward trend since then, plummeting by more than 40% in less than a week. TRX may face tremendous sell pressure to close the gap as long as USDD is below one dollar.
TRX has found support at the $0.05 level, from which it has bounced higher. TRX’s resistance is at $0.057, and given the current fundamentals, it doesn’t appear likely that the trend will shift.
Related reading | TRON Has a Record-Setting Month
Justin Sun Scrambles To Save USDD
However, Tron, like Terra, is putting billions of dollars behind the coin. Because USDD is not as large as UST, which was worth roughly $20 billion at its peak, crypto specialists think that it will not suffer the same fate.
USDD had recently been changed by Tron’s Sun to strengthen collateralization and make it less vulnerable to a crash like Terra.
This week, Tron spent over $700 million on the open market to sustain the USDD peg. Justin Sun also stated that a $2.5 billion fund would be set up to help TRX.
Tron has purchased TRX on multiple occasions to support the token, most notably withdrawing $948 million ($47 million) from Binance. The Tron DAO has made a number of withdrawals from Binance and has also used its USDC assets to purchase more tokens.
Tron has also announced a mining pool with Curve Finance and Convex Finance, which is intended to attract yield-hungry traders with an estimated APR of 96.25%.
Despite Justin Suns’ assertions that the USDD is unduly collateralized, the market does not appear to agree. The trend for TRX is likely to be negative as long as this continues, and the next significant support is identified at $0.040.
Related reading | Why TRON Has Seen a 45% Hike in Total Value Locked (TVL)
Featured image from Pixabay, chart from TradingView.com
