Key Takeaways
TRX’s surge since the start of the year was driven by two main factors. However, profit-taking could impact price negatively.
Tron [TRX] has maintained a strong trend since the start of the year to date, leading to record-high realized gains for TRX.
However, at the time of press, TRX had barely moved since the close of the previous day. However, it continued to attract a lot of daily trading volume — about $920 million.
Realized gains for TRX hit record highs
Tron’s realized gains for the last 24 hours were the second highest when gauged on a year-to-date period. TRX’s gains were only dwarfed by Bitcoin [BTC] and Ethereum [ETH], which were at $665M and $337M, respectively.
These profits have escalated in the last five days, with almost $1B at press time. But despite a SOPR value of 1.04, the Net Unrealized Profit/Loss was cautiously optimistic.
This suggested a short-term shift in behavior of the holders, possibly towards profit-taking. Per Glassnode, these holders had held since the 2020-2021 bull market.
Source: Glassnode
With that in mind, what could have led to these gains?
What fueled these profits?
The implementation of burn mechanism to create scarcity seems to have got the job done. As of the time of writing, Tron had burned about 40B TRX, which reduced its supply.
More tellingly, in the current month of August, Tron had removed about 166M tokens, a tenth of what was burned in July. The Foundation has maintained this steady burn mechanism since the start of 2023.
Source: CryptoQuant
Not only did the surge in price come from burning, but also from fees, as Tron served as a layer for stablecoin issuance.
Tether’s USDT, which is mostly issued on Tron and ETH, generates about $7.57B in annual fees.
Also, the founder, Justin Sun, has been in the forefront in popularizing the altcoin. His collaboration with other chains and top memes like Trump drove more attention into the chain.
This also improved it revenue generation for participants using the platform to transact the memecoins.
Impact of profit-taking on price
However, Tron;s price action could be set for short-term price drop following the spike in profit-taking activity.
TRX has been trading way above its 52-week low and was approaching $0.42. This move has been running since the low of $0.20 in early February.
The MACD was appearing to react to the holder activity, as the strength had slightly shifted to bears.
Source: TradingView
Fortunately, all was not lost, as the Stochastic RSI hinted that sellers were getting exhausted after a period of locking gains. The metric, at 40, was approaching the neutral value.
TRX could thus face a short-term price correction before resuming its upward trajectory.
