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- The Tron network experienced a wave of memes, reducing stablecoin dominance to 75%.
- In short, the network may be exposed to higher volatility.
Tron (TRX) has fallen more than 6% over the past seven days, dragged down by Bitcoin’s (BTC) downward trajectory, trading at $0.15 at press time.
Interestingly, TRX saw a significant increase after the launch of Solar pumpa Tron-based platform focused on memecoins. Currently, memecoin activity has surpassed stablecoin transfers on the network.
Given that memecoins are notoriously volatile, their dominance over stablecoins raises an important question: Could this shift in activity pose a risk to TRX’s long-term value?
Memecoin Culture Threatens Tron’s Stability
Source: CryptoQuant
Earlier this year, stablecoins dominated Tron network activity, accounting for around 98% of transactions.
However, since SunPump launched on August 9, the situation has changed dramatically, with stablecoin activity now accounting for around 75% of the network’s transactions.
This indicates a striking trend where most Tron users are moving towards volatile tokens, making the value of TRX more unstable.
To put things into context, investors holding SUNDOG, the largest memecoin on the Tron network by market capitalization, jumped to 220,269 in just 20 days.
Meanwhile, USDT volume on the Tron network has declined significantly. Just before SunPump launched, USDT volume reached $100 billion, but it now stands at $63 billion, which is a staggering 37% drop.
Source: Dune
According to AMBCrypto, this indicated potential instability in the Tron ecosystem, as a decline in stablecoin volume coupled with increasing memecoin activity could lead to increased volatility, pushing TRX lower.
So, is it true?
USDT Net Flow Has the Answer
It’s no surprise that SunPump has increased the value of TRX for two consecutive weeks since its launch in early August, pushing it to test the $0.17 resistance.
However, the optimism faded sooner than expected as TRX pulled back and absorbed a bearish pullback below the $0.15 price range.
Simply put, even memecoin dominance couldn’t shield TRX from the effects of Bitcoin’s volatility.
Surprisingly, the chart below shows a staggering $0.142 billion USDT outflow on the Tron network, signaling renewed investor confidence in stablecoins.
Source: DefiLlama
As stablecoin outflows increase, this could cause a correction in the TRX price, indicating that more investors are exchanging USDT for TRX when the price drops or when they reach a profitable position.
Realistic or not, here is the market capitalization of TRX in terms of BTC
Overall, TRX could be headed for a reversal if these trades occur.
However, if investors choose to buy memecoins instead, it could plunge TRX into uncertainty as most memecoin holders are short-term traders aiming for quick gains.
