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Tron Price Analysis: Short term fundamentals and technicals lean bearish

The TRON protocol has observed significant growth since its mainnet launch in 2018, displaying impressive active user numbers and transactions. However, the project's fundamental value has taken a hit in recent months, following several well publicized scandals tied to its CEO. Short term technicals also lean bearish.

TRON (TRX) is a platform blockchain. Its native token TRX has established a top-15 position in Brave New Coin’s market cap table. TRON is a project that has consistently divided the crypto community. Its detractors view it as vaporware with value created through aggressive, retail targeted marketing and PR. Its supporters, however, view the project as a legitimate long term challenger in the platform blockchain space, with genuine potential to disrupt legacy systems in the digital media and distribution industries.

TRON, or the Tron protocol, refers to the underlying blockchain, while Tronix or TRX, refers to the network’s native token, which has several different functions within the TRON ecosystem. TRX is used to power smart contracts and it can be frozen (staked) for users to access zero transaction fees and to participate in voting for network block producers. It is paid-out to block validators for confirming transactions, and several TRON Dapps (decentralized applications) use it as an in-app payment token.

At present, the primary use case for TRX is speculation (as is the case with most crypto assets). A large portion of Tronix holders are less interested in the user experience, or the utility options built into TRX. This group are speculators who buy and sell tokens based on short term price movements, in order to make a profit.

There is also likely a smaller group of inactive users who may be holding TRX for a longer-term due to future expectations of utility and price appreciation. Travis Kling, Chief Investment Officer of Ikigai Capital said, “Owning Ethereum today is a call option on what you think the network is going to be in the future.”

TRON’s broader network utility is similar to other platform blockchains such as Ethereum. TRON uses an adapted version of the Ethereum Virtual Machine to execute and test smart contracts, called the TRON Virtual Machine.

The price of TRX has fallen by ~36% in the last month. The project has been adversely affected by recent negative news stories related to maverick Tron foundation CEO Justin Sun. Over the same period, the price of market benchmark BTC has fallen ~3% and the overall crypto market cap excluding Bitcoin has fallen by 22%, suggesting relative under-performance of the TRX token.

Recent PR challenges

Following the sudden cancellation of Sun’s much-anticipated charity lunch with billionaire mega-investor Warren Buffett, Sun published a public statement on Chinese social media platform Weibo apologizing to the Tron community for “vulgar hype and marketing behavior.”

In the later deleted statement, Sun said that he felt “ashamed” about his over-marketing. Referring to the lunch with Buffett, Sun admitting misusing his position as a public figure to promote the meal. Sun said that he would now adopt a more mature approach and align TRON operations with frameworks set by international regulators. He said that youth and inexperience were the drivers of his overzealous marketing and PR strategy.

When Sun canceled the lunch three days before it was set to occur in San Francisco, he cited poor health. Chinese and crypto media outlets went into panic mode, circulating stories that Sun was being questioned by Chinese authorities in the US, or that he had not been allowed to leave China in the first place.

Sun was quick to deny these rumors, posting images of himself at San Francisco landmarks with timestamps. But these did not stop the media factory from discussing and speculating the circumstances behind the Sun/Buffett lunch cancellation. Media outlets in China questioned the images and asked how Sun could have evaded Chinese authorities to attend the lunch in SF. Chinese business publication 21st Century Business Herald asked, “Is he just postponing the Buffet Lunch?” The Global Times, a nationalist tabloid accused Sun of using the lunch as a way to boost his public profile.

Justin’s Sun’s recent controversies do not end there. On July 26th, BitTorrent founder Bram Cohen accused Sun of not making the final payment to complete the TRON foundation’s USD 140 million acquisition of BitTorrent.


Preceding these events, on the 9th of July police were called to Tron’s local offices in Beijing after the project was implicated in a multi-million dollar Ponzi scheme. Tron is known as ‘Wave Field’ in China, and the ‘Wave Field Super Community’ scheme created value by claiming association with the large, popular Tron project. The scheme is reported to have cost investors 200 million yuan and lead to one suicide, a middle-aged single mother who borrowed cash from a neighbor to buy into the Ponzi.

‘Wave Field Super Community’ claimed to be a Tron Super Representative, one of the 27 Tron token holding community voted nodes who are given network operation duties on the platform. Several victims of the scam claim to have attempted to contact Sun and the Tron foundation to confirm the Ponzi’s position as a Super Representative but received no response.

Tron did eventually respond to the story on July 1st, with Sun posting on Chinese social media platform Weibo that investors should be wary of scams attempting to utilize the TRON brand. Sun, did not reference the ‘Wave Field Super Community Ponzi’ specifically.

When details of the suicide went public and Sun continued to avoid the issue directly, the Chinese Tron community-directed their frustrations towards the Tron foundation CEO. Some viewed Sun’s silence as complicity in the scam, while others suggested that TRX, which was utilized to execute the Ponzi, benefited from the transaction activity and liquidity generated by the Ponzi.

The situation came to a head on July 9th when an angry mob arrived at the Tron offices and police had to be summoned to protect Tron staff.


The effects of the individual new stories on TRX spot prices

The Tron protocol

The vision of TRON as outlined in the most recently published white paper is to build a “project dedicated to the establishment of a truly decentralized internet and its infrastructure.” A major step towards this goal was the purchase of the BitTorrent protocol in June 2018 for a reported USD $120 million.

Ethereum smart contracts are compatible within the TRON Virtual Machine, and TRON markets its solution to blockchain developers as a low-cost, energy-efficient deployment alternative to Ethereum.

TRON smart contracts run on a dual-format system. There is an option to freeze TRX tokens (stake) to access network energy and bandwidth, foregoing standard TRX based individual smart contract operation gas fees.

Tron smart contracts run on a dual-format system. There is an option to freeze TRX tokens (stake) to access network energy and bandwidth, foregoing standard TRX based individual smart contract operation gas fees.

This lets users conduct transactions on TRON without paying fees, as long as they are willing to freeze tokens for a period of time. A user on a TRON smart contract based gambling Dapp (decentralized application), for example, provided they have enough TRX on their wallet/Dapp browser, can freeze tokens and conduct multiple fee-less transactions during a gaming session.

This makes TRON’s no-transaction-fee model appealing to developers building high transaction count Dapps like dice rolling games, where users seek to have as many turns as possible in a session.

TRON uses a modified version of Delegated Proof of Stake (DPoS) called TRON Proof of Stake (TPoS). There are three types of nodes within the TRON network: Witnesses (Super Representatives), Full Nodes and Solidity Nodes. A Witness is responsible for block production, a Full Node provides APIs and broadcasts transactions and blocks, and a Solidity Node synchronizes irrevocable blocks and provides inquiry APIs.

Super Representatives represent the ‘Delegated’ aspect of the TRON consensus model. There are 27 possible Super Representatives that can be picked from a pool of 127 possible candidates. The 27 are selected every 6 hours to perform their tasks. The pool of 127 possible block producers is selected by the entire TRX token holding community.

The 127 candidates are activated once every 6 hours and share 115,200 TRX per interval. The reward is split according to the number of votes each candidate receives. The total reward for candidates is set at 168,192,000 TRX (~USD 4,507,545, present spot prices) each year.

Super Representatives, the direct block producers, generate one block every 3 seconds, with each block awarding 32 TRX to Super Representatives. A total of 336,384,000 TRX (USD ~9,015,091, present spot prices) will be awarded annually to Super Representatives.

There is currently no inflation on the TRON network (no new tokens being created by block production) with the TRON Foundation (the original TRX issuer) currently awarding all block rewards and candidate rewards.

This rule has been set until January 1st, 2021 and there is no clear indication of what the TRON foundation will choose to do once this date is reached, but it appears that the current model of shrinking money supply is unsustainable in the long run.

The TRON protocol’s permissioned, tight quorum model means the TRON protocol is capable of high throughput and low transaction costs, however, this comes at the sacrifice of decentralization and censorship resistance.

The TPoS lacks the competition and objective consensus present in Bitcoin’s Proof of Work model, and as such, Super Representatives within TRON have more opportunity to game block production and maximize their profits without fear of being held back by a large network of nodes, particularly if some SR nodes work together to rig the TRON voting model.

The TRON representative voting model has shown signs of being riggable, with evidence of some nodes buying, and being placed into their positions through votes from whale accounts and other super representatives who control large TRX holding wallets. Voter turnout has been as low as 10% on previous candidate elections suggesting a lack of accountability for incumbent nodes.

At present, the TRON representative voting model is not functioning like the democratic model it was designed to emulate. This is a strong bearish flag, and if the Super Representative model is not re-aligned it remains a significant long term concern for the token holding community.

In a deleted Medium blog post, former TRON CTO Lucien Chen described his decision to leave his position at the blockchain project because it had become ‘overly centralized’ and that TRON’s current direction and state was an ‘irreconcilable contradiction’ to the original TRON ethos to ‘decentralize the web’. He blamed these issues on the TPOS model and the tremendous control over network direction that the 27 super representatives exert.

Recent network activity

Tron compares favorably to other platform blockchains. Over the last 90 days, Tron has handled more transactions and users than the Ethereum blockchain, while USD volume for the protocol has trumped both EOS and Ethereum on several occasions. However, because of a transaction model where ‘fees’ are essentially held in escrow and then returned to users, mean user and transaction numbers may be inflated.

The economic value of transactions and users is diluted when users don’t have to commit fees to the network. Networks like Ethreum, where users incur direct costs for individual transactions, transactions, and user growth are likely more reflective of improving performance.

A metric where Tron and EOS both lag behind Ethereum is the number of projects created with the Proof-of-work based chain having 3 times the number of applications as the other two on its platform. Tron has previously been assessed negatively by members of the blockchain development community for issues such as:

  • making bold, unverified claims in documentation i.e. that the network handles, or is expected to handle 10,000 TPS (Transactions Per Second)
  • Testnets that have a tendency to drop off for hours
  • A crude infrastructure overlay as compared to Ethereum with fewer Software Developer Kits (SDKs) and fewer mobile Dapp wallets
  • Smart contracts that cannot be redeployed. If a developer makes a mistake in their code, then the only option is to upload a completely new smart contract.



The WIN IEO: Leading Tron Dapp runs a successful sale

A key driver of short term fundamental strength is likely to be the response to the IEO launch of flagship ecosystem token Wink. The sale was conducted on the 31st of July using the Binance Launchpad platform, the most successful and visible platform in the IEO space.

The WinK IEO had a hard cap of USD 6 million and allocated 49,950,000,000 WIN tokens (5% of Total Token Supply) at a price of 0.0001201 USD (not exact because token were paid for with BNB) per token. Wink tokens were allocated based on a lottery model, with each ticket to the IEO costing 30 USD with a maximum number of 200,000 tickets selected. Ticket selection on launchpad is based on factors such as how long a user has been a BNB member, the size of their BNB holdings, as well as randomness.



The IEO carried some additional weight because of the prominent position Wink had already established within the Tron Dapp ecosystem. Wink and the WIN token are rebrands of Tronbet and the ANTE token. Tronbet/Wink has for an extended period of time, been the leading Dapp solution in the Tron ecosystem. It currently generates over ten times the daily USD transaction volume of the next most popular Dapp while its underlying token has been praised for creating value for its Dapp’s users through a transaction mining model (earn tokens every time a user makes a bet).

The Ante token has been re-imagined as the WIN token with new use cases, including a staking model where users can earn Gas or power for locking tokens. They can also use it to access airdrops, network governance, and gameplay bonuses. Wink can also be burned, meaning Wink holders will gain equity-style dividend rewards for holding Win. Many of these use cases resemble similar utilities built into the highly successful Binance Coin (BNB) model.



Despite the apparent appeal of the WIN token sale, the IEO has had little impact on the price of TRX. The medium to access the sale was the Binance Coin, and not Tronix meaning users were not required to accumulate any TRX to participate in the sale. However, the sale may have driven pressure towards Tronix tokens because the WIN token will operate on top of the Tron protocol. It may drive positive fundamental growth by generating new transactions and user activity post-sale.

This effect was also mitigated because WIN will be launched on the Binance chain as well as the Tron protocol, meaning any potential positive fundamental effects generated by the growth of the platform will be split across users on two platforms.

Leading crypto analyst and partner at Placeholder Ventures, Chris Burniske, has published Placeholder’s newly created Network Value to Token Value (NVTV) metric as an indicator of the fundamental value of platform blockchains. The NVTV ratio divides the network value of a smart contract platform by the total value of all assets launched on that platform. For example, a growth in the value and usage of WIN tokens should improve perceptions of the Tron platform’s NVTV ratio, and also mitigate the potential manipulation of metrics like on-chain volume and users. In this sense, growth in the WIN market cap could be a driver of fundamental value in the near future.

Exchanges and trading pairs

The most popular trading option for TRX is USDT with the pair handling ~57% of the daily trading volume. The second most popular market is the TRX/BTC pair. Together the top two pairs make up over 79% of the daily trading volume. The total USD value of the daily volume of the entire TRX trading market is just ~USD 13,090,289,712.


TRX trading is distributed across a range of altcoin exchanges, with the top 5 individual markets spread across 5 exchanges. The EXX exchange operates the most popular trading market. TRX is also available for trading on well-established exchange platforms Binance and Okex.


Technical Analysis

Moving Averages and Price Momentum

Sitting at $0.021, TRON has given away all but 11% of 2019 gains. On the 1D chart, TRON has recently completed a death cross (anchor) with price firmly below both 50 and 200 day EMAs.


Until late-June, TRON was performing relatively well, including following Fibonacci retracement levels to higher values. Since then, price has fallen sharply, and currently sits at the 0.786 level of $0.021. Given the current momentum, further declines to the 0.618 level of $0.0189 are likely. However, price can stem the ‘bleeding’ by recovering the 1.0 level of $0.0236.


On the 1D chart, the volume flow indicator (VFI) is still above 0, but trending downward. A recovery above the 24 level (trend line) would signify a slowing of the downtrend and possible reversal. If that doesn’t occur, which looks likely, further decompression back towards 0 will see price take out the support levels mentioned prior.


Ichimoku Clouds with Relative Strength Indicator (RSI)

The Ichimoku Cloud uses four metrics to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, Lagging Span (Chikou), and Senkou Span (A & B).

The status of the current Cloud metrics on the 1D frame with singled settings (10/30/60/30) for quicker signals are bearish: price is below the Cloud, Cloud is bearish, the TK cross is bearish, and the Lagging Span is below the Cloud and price.

A traditional long entry would occur with a price break above the Cloud, known as a Kumo breakout, with price holding above the Cloud. From there, the trader would use either the Tenkan, Kijun, or Senkou A as their trailing stop.

Currently, price is demonstrably beneath the Kumo cloud and showing few signs of reversing the trend. However, one hope is that RSI is currently oversold, which could provide the catalyst needed to slow the decline. A key resistance level that price will need to overcome in order to turn the oversold bounce into a sustainable recovery is $0.0259. If so, breaking above and holding $0.0326 will initiate a new Kumo breakout. If not, support levels are $0.02 and $0.0176.


The status of the current Cloud metrics on the 1D time frame with doubled settings (20/60/120/30) for more accurate signals are bearish: price is below the Cloud, Cloud is bearish, the TK cross is bearish, and the Lagging Span is below the Cloud and price.

The slower settings offer an equally as grim picture for TRON.



A year after its mainnet release, TRX has held on to its position as a top 15 cryptographic asset. However, this position appears to be increasingly precarious. Recent heavily publicized drama connecting Tron and its CEO to investigations by Chinese border authorities, missing payments, Ponzi schemes, and even a suicide, have affected fundamental perceptions of the project. Current operations are so messy that the future of the project has been called into doubt.

Underneath all this external drama, the Tron protocol continues to function as a platform blockchain. It has observed a continuing stream of daily users, transactions and volume over the last 90 days. The perception of these metrics is affected by TRON’s flawed Delegated Proof-of-stake model and underlying concerns about a lack of decentralization.

Even a recent positive fundamental sign in the form of a major IEO of a Tron based token failed to create short term buying pressure for TRX. However, despite the bearish short term fundamentals TRX remains heavily traded with good liquidity. Under the right external market conditions, it may offer cyclical returns similar to tokens such as Bitcoin Cash ABC (BCH).

The technicals for TRON are quite bearish and offer few signs of revival beyond short-term oversold bounces. Without a demonstrable improvement or catalyst, a new Kumo breakout is unlikely over the coming weeks. With that said, key support levels are $0.02 and $0.0176.


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