On January 15, an unexpected event occurred in the cryptocurrency market. TrueUSD (TUSD), a stablecoin pegged to the US dollar, saw its value drop to $0.985, breaking away from its usual $1 parity. This TrueUSD price decline and sell-off coincided with rumors that holders of the stablecoin were trading large quantities of TUSD for its rival, Tether (USDT).
Behind the Scenes of TrueUSD’s Trading Frenzy
According to trading data, TUSD experienced a total inflow of $301.54 million within a 24-hour period, while outflows reached $147.77 million. This imbalance, coupled with the actions of large-scale traders and market dynamics, is believed to have contributed to TrueUSD’s loss of parity.
Over the past fortnight, the value of the stablecoin has been on a downward trajectory, slipping from $1 to $0.985. This is the second notable drop against the US dollar for TUSD in the last two months. Previously, in November 2023, the stablecoin fell to $0.988.
Concerns Over TrueUSD’s Reserves
Adding to the concerns, TrueUSD has had difficulty providing real-time attestations of its reserves. Questions regarding the possibility of the stablecoin being undercollateralized surfaced on January 10. A report by Protos further revealed that the system encountered multiple API errors, preventing it from providing a US dollar value for its collateral assets.
A user known as Rho Rider first drew attention to TUSD’s issues on December 16, hinting at a potential arbitrage trade for the stablecoin. TUSD was trading nearly 8% below its peg at $0.92 on Poloniex, while maintaining a steadier price of around $0.99 on Binance. However, the arbitrage trade seemed unfeasible as users reportedly faced difficulties withdrawing or depositing TUSD on Poloniex.
TrueUSD’s Exclusion from Binance’s MANTA
Binance recently announced Manta as its 44th Launchpad project but notably left TUSD off the list of cryptocurrencies eligible for staking to earn MANTA. Instead, BNB and FDUSD were chosen to participate in the project. The omission of TUSD from this selection appears to have sparked a reaction from users, resulting in a further decline in TUSD’s price to $0.985 following the sell-off.
Several users have also suggested that the significant sell-off may be linked to TrueUSD’s exclusion from Binance’s Manta launch pool initiative.
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As the TrueUSD price decline and sell-off illustrates, the cryptocurrency market is a volatile and rapidly changing environment. Staying informed and understanding the factors that drive these changes is crucial for any investor or trader in this space.
