Buy the Dip
Down nearly 75% from the all-time high of 0.30 USD on January 5th, Tron is currently trading at 0.08 USD. The steady pull-back over two weeks has been enough to scare most investors away from a currency they find tanking back into obscurity. But keep two things in mind: First, the entire market has entered a bear downturn in value since reaching its peak in late December. Bitcoin has been receding in price as well, artificially decreasing the price of Tron as most of the money going into altcoins must first pass or be traded through Bitcoin. The end result is the per-satoshi value of TRX has had less of a decrease relative to its fiat value.
Secondly, TRX was in severe need of a correction following the January 5th price peak. On December 10th, Tron was trading for half a penny. Less than a month later, TRX was up 6000% for an all-time high of 0.30 USD. Profits that grow exponentially can also decrease just as fast. TRX benefited from getting hot just as Bitcoin and the cryptomarketplace was reaching its most recent peak in terms of value. As Bitcoin stagnated, the newly acquired wealth flowed into altcoins, including several that could be purchased in large quantities for low per-coin price-points. Thanks to founder Justin Sun, Tron was a coin with great social media exposure, a low price-entry point and large supply. However, the looming price correction also coincided with a severe downtick in the market. Nearly all coins are down in some way since the start of the year, with Tron suffering one of the most severe drops. But that also creates the conditions for a severely undervalued coin that could again grow as much as 300% back to its all-time high when the market pick up again.
TRX Designed for Real World Application
From the beginning, Tron has been developed as an integration currency in a decentralized, entertainment/content based system. Lots of cryptos have white papers talking about the world problems they intend to solve, but often have little need for the native token. TRX has a strong vision and focus, and has been able to develop Asian-based partnerships impressive for a company that has only been around for less than a year.
Let’s compare Tron to another high-cap, theoretically lower priced coin like Ripple, which commands a market cap 13 times that of TRX. While we support taking a long position on Ripple, considering the possibility of Coinbase and more money transfer partnerships on the near horizon, the fact remains: there is no current need to own XRP. The same can be said for most cryptocurrency. Even Bitcoin, the flagship of the crypto world, is criminally short on reasons to own BTC outside of the appreciation in price. The Tron team, helmed by Justin Sun, are pushing both the value of their technology and the value of TRX. While it’s technically possible to call most cryptocurrencies a ponzi scheme, particularly if they fail to develop real-world use and trade only on speculation, purchasing Tron is taking a position that it will be used for future transactions. The risk of buying now, when TRX has yet to establish its intrinsic worth or to succeed in any substantial way, is the tradeoff for the profit to be made. At one point Apple was trading for a fraction of a percent of what it does today. There’s a difference between ponzi scheme, which can only grow through the input of new investors, and risking a stake of capital to support a project that may pay dividends in its future use.
Bet on Founder Justin Sun
Justin Sun, founder of Tron, presents an interesting juxtaposition to Charlie Lee, the founder of Litecoin. In Charlie, you have another high-profile, vocal cryptocurrency advocate (particularly through Twitter) that has been a regular figure in the community dating back to its inception. Lee has gained enough renown to make appearances on CNBC’s Squawk Box, where he not only promotes Litecoin, but also Bitcoin and the value of cryptocurrency. However, Charlie shocked the entire world of crypto in December by announcing that he had sold all of his Litecoin, removing any financial stake he held in the currency. While Charlie still supports his progeny cryptocurrency, he has made thinly veiled allusions to stepping away from the project altogether.
Justin Sun on the other hand, is about as vocal and vested in his currency as you can possibly find. Sun has an overtly active presence on Twitter, where he updates fans and investors of Tron with regularity. However, this open relationship is a double-edged sword. Sun may be a master of creating Twitter hype, drumming up excitement in the anticipation of new projects and announcements, but he also invariably causes elevated expectations. The result is a classic manifestation of “buy the rumor sell the news.” Investors flock to buy more TRX on the back of Sun’s promises and hints at even bigger dealings. When the news finally manifests in an official announcement, such as the partnership with Baofeng, TRX suffers a selloff and receding in price. Ripple has had a similar effect following the MoneyGram pilot program. The Baofeng news is significant, and should be pushing up the price of TRX from excitement alone. However, there is profit-taking to contend with. There are investors looking to get out before the price dips further, etc. The creation of FUD around Tron is tremendous, and can mostly be attributed as resentment towards the otherwise charismatic founder. For every member of the public Sun wins over to invest in Tron, there are others that will accuse him of artificially pumping the price and other self-serving needs (Sun’s holding in TRX, which is locked in a made-public address, is valued in the billions).
However, in the long run, it would be worth betting on Justin Sun to will the Tron project to success. His ability to drum up excitement and media attention is a valuable act, and one that will ensure Tron stays on the front page of crypto outlets and, eventually, a larger media presence. As time passes he will grow into a confident founder that can steer Tron with a more subtle hand, combining his enthusiasm with more realistic expectations. At the very least, it’s hard to imagine a founder who was able to grow his currency 6000% in the span of weeks unable to raise the price again as more partnerships are formed and real-world implementation occurs. Don’t allow a myopic view on the current price-fall cause you to miss out on this potential gem.