TrueUSD: Why the Wild Price Fluctuation?

Listing the fixed-price coin on Binance caused anomalous trading, but the asset returned to its peg within a day.

TrueUSD (TUSD) is a fixed-price asset that got recently added to the Binance exchange, expanding options for trading. But the listing caused an unexpected price spike, as high as $1.32, meaning buyers faced an immediate loss of 30%. Trading on Binance has been delayed for now, to take care of details around the TUSD active trading:

TUSD is now at $1.01, within the range of 5% fluctuation which is preferred by the team. After the launch of the asset, the team warned not to bid for TUSD above $1.05.

 

The team immediately explained the situation, with the most likely reason being trading bots, which did not manage a “sanity check” for the asset. The reason for the stable course of the TUSD is not a special effort on part of the team, or a mechanism to affect the rate, as it is with BitUSD.

“TrueUSD saw a large, sudden increase in demand after Binance first announced they are listing TUSD. We think that bots (and some misinformed traders) bought TrueUSD as soon as the announcement was made,” the team commented.

The Binance listing also coincided with a huge spike in interest in TUSD. Only yesterday, TUSD tokens resided in around 289 addresses, for around 13 million tokens. But only within a day, the number of wallets holding TUSD increased to 449. The team believes a lot more owners have the token in their balance exchanges.

Some buyers acquire TUSD directly from the app, but the possibility is to transfer the token between exchanges, to make use of price arbitrage. While some consider fixed-price tokens like Tether (USDT) risky, for others, there is more price risk in transferring fiat, and that is sometimes also impossible due to strict control over international bank transfers.

Tether trading is also becoming more and more active, now taking up around 30% of Bitcoin volumes, after the share of the Japanese Yen crashed to 14%. USDT remains the second most traded currency, with a share of 15.7% of the entire crypto market. The supply of more than 2.3 billion USDT for now dwarfs the TUSD circulation.

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