The TUSD depeg alerts investors on Binance: will it meet the same fate as UST on Terra/Luna?

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Between yesterday and today, the stablecoin TrueUSD (TUSD), issued by the mysterious company Techteryx Ltd, has lost about 1% of its value in the midst of a dip that has involved many traders on the cryptocurrency exchange Binance.

In particular, the last 24 hours have seen a negative deficit of $142 million between buyers and sellers of TUSD, which at the time of writing the article is priced at 0.985 dollars per token.

Among the reasons that may have triggered the stablecoin’s detachment, we see several rumors of a connection between the digital asset and Justin Sun, who recently suffered two major hacks, and the failure to connect with the latest Manta launchpool on Binance.

Investors who hold positions on TUSD are now scared that it may meet the same fate as UST, which collapsed miserably during the Terra/Luna project implosion.

Let’s see all the details below.

The TUSD takeoff: Binance’s stablecoin loses almost 1% 

The stablecoin TrueUSD (TUSD), issued by the Chinese company Techteryx and supported so far by Binance, is not doing very well: between yesterday and today it has experienced a heavy drop that has caused it to lose about 1% of its value.

Currently it is being traded at a price of 0.985 dollars and it seems to have lost, at least temporarily, the anchor with the quotation of 1 US dollar.

It all started on the morning of Monday, January 15th, when following a brief +0.20% rally, TUSD began printing increasingly violent red candles on the chart, going against what should be its stable value in the cryptocurrency market.

At midnight, it marked the lowest price of the day, only to partially recover during the night and face another session of declines this morning.

Binance data shows that in the last 24 hours there have been over $444 million in TUSD sell orders compared to $301 million in buy orders, resulting in a flow deficit of $142 million.

depeg tusd binance

The TUSD depeg comes after 3 months of capitulation for the stablecoin, which has lost a whopping $1.6 billion in market capitalization, negatively impacting its market share.

The causes that have triggered this situation are mainly two:

First of all, some rumors spread by CryptoQuant analyst Bradley Park have shown how TUSD may somehow be linked to billionaire Tron patron, Justin Sun.

This latter, although it does not seem to have any ownership in the mysterious company Techteryx (of which the founder is still unknown), would have some influence on the stablecoin.

Given the recent hacks of Poloniex and HTX, it is possible that the escape of stolen capital may have prompted investors to anticipate a contraction of TUSD.

Furthermore, we must consider the role that TUSD had until recently on Binance. After BUSD was excluded by the SEC and Paxos was forced to stop minting the resource, TUSD had taken the place of the reference stablecoin for the exchange, used in various initiatives such as zero fees promotions, staking, and launchpool.

During the last launchpool of the Manta token on Binance, it was discovered that TUSD was not included as a crypto to be locked and farmed with the new tokens, while Fist Digital USD (FDUSD) was proposed instead.

For the latter, a zero fees promotion has also been opened for spot and margin trading on pairs against XRP, BNB, DOGE, ETH, LINK, and SOL.

It seems that Binance is trying to replace TUSD with FDUSD: it is interesting to note how the latter has practically conquered the entire market cap of the former from October until today.

In reality, various rumors are also adding fuel to the fire regarding TUSD’s certifications, although there are currently no confirmations of any kind.

A spokesperson for Techteryx told Coindesk that 

“The attestations continue in the normal course of business and any contrary suggestion is false.”

While TUSD holders are now scared that the situation could end in a tragedy, let’s remember that the stablecoin is not new to these anomalies, and has had numerous past cases of depeg in its history.

For example, on January 25, 2021, TUSD reached its all-time low of $0.46 during a strong crash.

A little later, in May of the same year, it reaches the incredible amount of 3 dollars in the midst of market manipulation.

More recently, in March and May 2023, the stablecoin once again lost its peg to fluctuate between $1.2 and $0.96.

depeg tusd binance

Is TUSD destined to meet the same fate as UST on Terra/Luna?

Obviously, while TUSD faces its umpteenth depeg in history supported by a large amount of sales on Binance, stablecoin holders must now choose whether to liquidate their positions and face a loss of about 1% or wait and hope that sooner or later it can regain parity with the US dollar.

Without prejudice to the fact that these are not financial advice and that everyone must act based on their own portfolio allocation and risk management, we can still reflect on the elements we have available to provide an objective analysis framework.

Let’s try to distinguish positive and negative factors of TUSD that could influence a recovery of the peg rather than a collapse in the style of Terra/Luna project’s UST, which in May 2022 caused billions of losses to its investors.

Positive factors for TUSD, the Binance stablecoin that is undergoing a depeg

First of all, the depegging was not so violent, if there had really been serious problems, the stablecoin could have lost even 5% or more.

There is no specific news explaining a possible end for TUSD, when the only rumors speak of a possible involvement with Justin Sun’s companies and the HTX and Poloniex hack incident. 

On this front, it is also worth noting that the recent cited hacks have not put Sun’s finances in difficulty, who represents one of the wealthiest billionaires in the crypto landscape.

This would hardly lead to the collapse of a cryptocurrency associated with him, especially if potential accusations from the SEC and the CFTC are at stake.

Furthermore, it is worth noting that unlike popular beliefs, the market cap loss of TUSD in recent months does not justify a decoupling of the stablecoin, but at most a reduction in circulation.

Negative Factors for TUSD

The issuing company of the stablecoin, namely Techteryx, is unknown in cryptographic circles and very little is known about it.

This is not a good sign as there are no guarantees of transparency, which are fundamental when it comes to issues related to trust in the presence of any liquid reserves.

In addition, as already mentioned, this is not the first time that TUSD has faced a peg break: although we can interpret this characteristic as “resilience to stress tests,” let’s say that it is not normal to observe recurring anomalous behaviors on a stablecoin of this kind.

Conclusions

Unfortunately, we cannot know in advance if TUSD will meet the same fate as UST and disappear permanently from the cryptocurrency market.

For the moment the situation is not as serious as one might think: the peg with the dollar is still close and it takes little to return to a condition of normality.

For holders of the cryptographic resource, it is advisable to keep the situation under control and be ready to cut losses in the event that things go wrong.

In particular, eyes on the support at 0.984 dollars: if that level is broken downwards, it could trigger another leg down.

For those who are not familiar with this, remember that fully investing your liquidity in stablecoins could be a risky move as these types of cryptocurrencies, although technically stable in value, can encounter detachment from their anchor.

Let’s not forget, therefore, that even though stablecoins offer significant returns opportunities (especially in DeFi), they unfortunately present significantly higher risks compared to traditional fiat currencies.

Always do your research.