Is the Growing Tron Network a Negative Indicator for TRX? Expert Analysis
Recent data indicates a significant increase in activity on the Tron [TRX] blockchain following the launch of SunPump memecoin last month. According to TokenTerminal, there has been a substantial rise in monthly fees, transactions, and active users on Tron post the introduction of SunPump.
The surge in USDT supply on Tron has also played a crucial role in driving this growth, with figures climbing from $48 billion at the start of the year to $68.9 billion, now representing more than half of USDT’s total market capitalization of $118 billion.
However, the growth trend appears to be losing momentum, particularly with SunPump, as the number of daily active addresses has plunged from a peak of 73,000 in August to just 10,300 at present.
This decline in network activity is further evident in the decreasing volumes of decentralized applications (dApps). DappRadar data reflects a decline in dApp volumes on Tron from $73M to $58M since the beginning of the month, with the number of Unique Active Wallets (UAWs) almost halving, dropping from approximately 15,000 to 6,000, indicating a reduced user base on the network.
The diminishing network activity has also impacted TRX’s price performance, failing to register significant gains and succumbing to bearish pressures.
TRX Open Interest Reaches a One-Month Low
As of now, TRX is trading at $0.15, displaying low volatility within the $0.149 – $0.51 range. Coinglass data highlights a downward trajectory in Tron’s Open Interest since late August, reaching a one-month low recently.
The decrease in Open Interest, combined with stagnant prices, indicates a lack of new positions being initiated on TRX while existing ones are being closed by traders.
This passiveness is mirrored in the Relative Strength Index (RSI), hovering at a neutral level of 50. A breakout of the RSI line above the signal line could potentially signal a buying opportunity, prompting bullish momentum.
A bullish divergence observed in the Directional Movement Indicator (DMI) following the positive DMI crossing over the negative DI hints at a possible uptrend for TRX.
If buying activity intensifies, TRX is likely to target resistance at the 0.382 Fibonacci level. Historically, breaching this resistance led to TRX achieving a three-year high at $0.17.
It’s worth noting that according to IntoTheBlock data, 94% of TRX traders are currently In The Money. Therefore, if TRX shows further weakness, traders may opt to sell and limit their losses, exerting additional downward pressure on the altcoin.