The recent performance of the cryptocurrency market has been largely bullish, with several digital assets enjoying significant gains. However, TRON’s TRX token is showing signs of slowing down after its impressive bullish run. The question now arises: Will TRX retain its gains from May or will we witness a new wave of profit-taking?
Reasons for TRX’s Bullish Run:
One crucial factor that may shed light on TRX’s recent performance is the substantial increase in Tron’s Total Value Locked (TVL). For the past three months, the TVL has remained consistently above $5 billion, indicating growing confidence in the network. Additionally, the Tron network’s fees have witnessed significant growth over the past five months. These developments suggest that the network has unlocked more utility, attracting long-term-focused investors who are staking their TRX tokens.
Impact of Staking on Sell Pressure:
The high level of TRX staked by investors has resulted in lower short-term sell pressure. This may explain why TRX hasn’t experienced a significant wave of selling despite its recent plateau. At present, TRX is trading at $0.0763, reflecting a 3.6% downside from its latest peak. The Relative Strength Index (RSI) indicates that TRX bulls have lost some momentum, and there has been a minor episode of profit-taking after the price became oversold. However, the lack of significant downside suggests a restrained sell-off for now.
On-Chain Metrics and Investor Sentiment:
Analyzing on-chain metrics provides insights into TRX’s next bias. TRX volume has pulled back since peaking between 22 and 23 May, marking the beginning of bullish weakness after the previous rally. Investor sentiment has also taken a hit after the peak but is gradually recovering. This indicates that there are still confident investors who believe in TRX’s short-term prospects.
Volatility and Derivatives Market:
Despite the recent slowdown, TRX’s volatility continues to follow an upward trajectory. However, the derivatives segment paints a different picture. Binance’s funding rates for TRX have spiked negatively during last week’s rally and over the past four days. This suggests that short traders in the derivatives market anticipate further price weakness in the coming days.
TRON’s TRX token has enjoyed a bullish run in the crypto market, supported by an increase in TVL and fees generated by the Tron network. The high staking activity has reduced short-term sell pressure, while on-chain metrics and recovering investor sentiment suggest that TRX may have a positive short-term bias. Nonetheless, the derivatives market indicates a cautious outlook due to negative funding rates, implying potential price weakness in the near future. As TRX navigates these dynamics, market participants will keenly observe whether the token retains its gains or succumbs to profit-taking.