Neutrino dollar breaks the peg and falls to $0.82 amid WAVES price manipulation allegations

Neutrino Dollar (USDN), a stablecoin issued via the Waves-backed Neutrino protocol, lost its peg to the US dollar on April 4 amid speculation that it could become “bankrupt” in the future.

USDN crashes 15% despite WAVES support

USDN fell as low as $0.822 on April 4, with its market cap also collapsing to $824.25 million, down 14% from its yearly high of $960.25 million.

Interestingly, the stablecoin’s tumble occurred despite Neutrino’s claims support its $1 peg about what’s called “over collateral”, ie when the total value of Waves (WAVES) tokens locked in its smart contract is higher than the total USDN minted, also called “backing ratio”.

Neutrino Dollar price development in the last 24 hours. Source: CoinMarketCap

Notably, according to official data, Neutrino Smart Contracts coverage ratio was 2.62 as of April 4th, underscoring that it had sufficient funds to support USDN’s 1:1 dollar peg; that is, despite the WAVES dropping over 35% over the past five days.

price manipulation

The price of WAVES fell from its record high of $64 on March 31st to as low as $47 on April 4th. The coin started falling when its momentum indicator, the Relative Strength Index (RSI), jumped above 70 – a typically “overbought” area triggering selling sentiment.

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WAVES/USD daily chart. Source: TradingView

Nevertheless, the sell-off also took place as a pseudonymous analyst accused Waves of artificially pumped WAVES by 750% in the last two months by:

1) Collateralization of USDN to borrow USD Coin (USDC) on Vires.Finance lending platform;

2) use of proceeds to purchase WAVES;

3) Converting the tokens to USDN and

4) reallocate them to the Vires.Finance pool to borrow more USDC.

The analyst also said that a decisive price drop from WAVES would render USDN insolvent.

However, Waves founder Sasha Ivanov denied the allegations on April 3, noting that you can’t move markets with more than $1 billion in daily volume by borrowing a few million.

He accused Alameda Research, a quantitative crypto trading firm led by FTX’s Sam Bankman-Fried, of launching a campaign against WAVES that was “fueled by a crowd of paid trolls” to honor their short positions on the coin .

See also: This is how traders were made aware of the big rallies of RUNE, FUN, WAVES and KNC last week

From a technical perspective, WAVES keeps its bullish bias above the confluence of two support levels: the 20-day exponential moving average (20-day EMA; the green wave) around $40 and the 0.382 Fib line near $42.50.

Conversely, a decisive break below the support confluence could risk plunging WAVES towards $30.

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