Despite Rallying Prices, Can Tron (TRX) Be Trusted enough to Invest Again?

Justin Sun’s Tron (TRX) has been in the news for quite some time now, and its recent price rally has taken a lot of investors by surprise. This recovery has also triggered some recovery in sentiments and support for the token. Ever since the launch of its own stable coin, TRX saw a huge surge in demand that was followed by the natural increase in prices.

TRON (TRX): A TECHNICAL OVERVIEW

Source: Tradingview

From a technical standpoint, TRX is still managing to hold on, despite wider market bearish pressures. So much so, it has managed to recover over 24% since the second week of June and still holding strong. It had successfully broken out of the trendline downward resistance (marked in orange) and has managed to stay above that till now. The Relative Strength Indicator is also at a reasonably comfortable place to support some upward action in the price for Tron.

However, there is still some cause for concern. The rising wedge pattern it has formed since the second week of June (marked in blue) can act as a spoilsport and dampen the mood. If the price is able to sustain its upward move, break out over the 50-day and the 200-day moving average (marked in purple and light blue), only then will its bullishness gain some more strength. Until then, long traders need to be more cautious and keep their positions light.

Check out latest TRX Price, Charts & Data.

FUNDAMENTALLY, HOW IS TRON DOING?

Ever since the launch of its own algorithmic stablecoin USDD, Tron’s fundamentals have been improving too, along with the price. For example, its Daily Active Users count has been on an incredible rally, going pretty much against the rest of the market.

The Active Addresses Count basically measures the sum of unique addresses that were active in the network (either as a recipient or originator of a ledger change) in a particular interval.

Active Addresses Count | Source: Messari.io

As is evident from the chart, the active address count went from about 1.2 million in the beginning of April 2022, to over 3.2 million towards the middle of July. Since then, it has seen a sizeable fall from the highs but despite that, it is well over the average since the beginning of the year.

WILL TRON (TRX) BE A GOOD INVESTMENT?

Another significant on-chain metric can infuse some much needed optimism in the token so that it can keep up its momentum. Tron’s circulating supply saw a major dip from well over 100 billion TRX to now around 92 billion TRX. Now what is circulating supply?

According to official definitions, the term circulating supply refers to the number of cryptocurrency coins or tokens that are publicly available and circulating in the market. The circulating supply refers to the coins that are accessible to the public and should not be confused with the total supply or max supply.

The total supply is used to quantify the number of coins in existence, i.e., the number of coins that were already issued minus the coins that were burned. The total supply is basically the sum of the circulating supply and the coins that are locked up in escrow. On the other hand, the max supply quantifies the maximum amount of coins that will ever exist, including the coins that will be mined or made available in the future.

Circulating Supply | Source: Messari.io

So simply, if there is shrinking number of token available in the public market to be traded by people, amid an increase in price, which suggests that there could some rising demand – it only points to the fact that there is going to be further price appreciation going forward. Now the reason behind the fall could be anything for Tron’s burning mechanism or the fact that large investors or projects are holding on to the coin for extended periods of time for various purposes.

CONCLUSION

Drawing final inferences from the overall analysis on Tron (TRX), we can conclude that there has been a surge in interest for this token. from reduction in circulating supply to healthy levels of daily active addresses count – one can assume that the community is optimistic about Tron’s near future. However, the thing to keep in mind is that Tron and Justin Sun have been in the limelight for many controversies in the past have had devastating results on its reputation and token prices. So a healthy measure of caution on the part of investors would be sound advice before investing this coin.