Tron’s native token TRX has seen significant upside since the announcement of a possible deal on the FTX exchange that would allow users to withdraw funds. This deal is one of the only deals that has gone into effect since FTX started facing issues and it looks like users are already taking advantage of it. However, it is not all good as users start to notice its downside.
TRX price explodes on FTX
TRX token is already there Over 500% on FTX crypto exchange During the last week on the FTX exchange. Tron founder Justin Sun had worked out a deal with the troubled exchange that would allow users to swap their crypto currently stuck on the platform for TRX tokens and then withdraw it.
This apparently makes it possible for users to swap digital assets such as bitcoin, ethereum, etc. into TRX, and then proceed to withdraw it, making it possible for them to withdraw previously stuck funds from FTX it happens. It has naturally become a popular option for FTX users, which has led to a rise in the price of the digital asset on the exchange.
In just 24 hours after the announcement, the TRX price had already increased significantly. While the price of the token remained relatively low on all other exchanges, it was trading as high as $0.43 on the FTX exchange. It is trading at a 600% premium on FTX compared to the $0.05 price mark it has on all other exchanges.
TRX price spikes on FTX | Source: TRXUSD on TradingView.com
There has been some volatility in the price since the token reached this new high on the platform. However, the price still remains high $0.43 at the time of writing, the trading volume in the 24-hour time frame is already over $630 million.
not a good deal
At first, converting digital assets on the FTX exchange to TRX for withdrawals seemed like a good idea, but this only lasted as long as the prices on the exchange were correlated to the broader crypto market. As the price of TRX rose on the FTX exchange, the value users were receiving when they exchanged their tokens fell sharply.
With TRX trading up to 500% above market value on FTX, this means users of the exchange will only get 20 cents on the dollar when swapping. This is because even after withdrawing TRX from FTX, they still have to exchange the tokens at the current market price.
To put this into perspective, let’s say someone had $10,000 worth of bitcoin and converted it to TRX at $0.43 (current price), they would receive approximately 38,570 TRX. When they withdraw and go to other exchanges for sale, they will only have $1,162 after selling, taking the current price on Coinmarketcap of $0.05. This translates to about 12 cents on the dollar.
Meanwhile, Tron is making banks to buy these digital assets cheaply as they only allow TRX to be transferred to FTX. At the current rate, they’ll see millions of dollars in profit, potentially giving FTX a healthy cut of the proceeds.
What this suggests is that end users are always screwed in times like these. Even seemingly “helpful” deals become just another way to exploit users who are already in a vulnerable position from the exchange’s collapse.
Featured image from Medium, chart from TradingView.com
obey Best Ovi on Twitter For market info, updates and the occasional funny tweet…