VeChain has followed the general sentiment in the market and it’s currently trading in the green. Its 24-hour profits stand at 7.8% with VET’s price exchanging hands at $0.053.

Related Reading | VeChain Foundation Announces New Stablecoin, Could It Create Fresh Demand For VET?

In a recent video posted on his YouTube channel, analyst Justin Bennett looked into VeChain as the sell-off across the crypto market seems to slow down. As seen below, on the weekly timeframe, the analyst believes VET’s price is yet to come out of the wood.

As the chart shows, VeChain broke an important trendline on the aforementioned timeframe as it failed to hold above the $0.060 level. Given the relentless selling pressure that led to a breakdown in that structure, Bennet believes “the market doesn’t look all that great”.

As long as VET is unable to break above its current levels and return to its weekly trendline, bears could continue to push the price back to critical support. In order for bulls to have a chance at a climb back to previous highs, VeChain must reclaim the $0.060 level in the short term. Bennett said:

It would have to close the day above $0.0650 before it starts to move back to $0.10, $0.12, etcetera. Until that day I think you have to be careful, and you have to realize that the downtrend is still intact.

In case of further downside action, the analyst determined that the $0.0350 area could operate as critical support. In 2021, this level operated as an early resistance and later as key support when the crypto market trend lower after May.

Related Reading | VeChain Foundation Welcomes New DEX To Its Ecosystem

Therefore, VeChain (VET) is currently at a major crossroad that could determine its price action for the coming months.

Potential Scenarios For VeChain (VET)

In addition to $0.065, $0.035 will be a “level to pay attention to” in case a new lower high comes into play. If the level holds, investors could have an important region for accumulation.

In the coming days, the most like scenario, Bennett claimed, could be a move into resistance for VeChain (VET), Bitcoin (BTC), and Ethereum (ETH). However, he expects those levels to be hard to break and will determine if VET will continue its move into $0.08 or $0.03.

Related Reading | VeChain’s DEX To Launch Governance Token And Yield Farming Program

In the VET/BTC weekly timeframe, VET has formed an ascending triangle that just hit critical support and could operate as support for that potential move into resistance in the coming days.

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The VeChain Foundation has started 2022 with a potential major announcement. Via their official Twitter handle, the organization hinted at the possible released of a new native stablecoin called VeUSD.

Related Reading | VeChain Foundation Welcomes New DEX To Its Ecosystem

The Foundation little details on this new product but announced its followers that it’ll be “something special (…). Something that will allow us to take VeChainThor to the next level in multiple ways”.

The stablecoin VeUSD will be a tool to “unleash” DeFi capabilities for the VeChain ecosystem. The digital asset, according to the official post, was designed following core principles of this ecosystem: sustainability, versatility, scalability.

The blockchain VeChainThor seemed to have been preparing for these new era of DeFi for a while. As NewsBTC reported, 3 months ago this network was upgraded after a community vote approved the implementation of Proof-of-Authority (PoA) 2.0.

Designed to support a “new wave of blockchain mass adoption”, according to the VeChain Foundation, the update was supposed to mitigate any tradeoffs on the consensus layer for the blockchain VeChainThor. At the time, the organization said:

(…) the VeChain Research and Development teams have been working on a massive upgrade of the VeChainThor blockchain called SURFACE (PoA 2.0), standing for a Secure, Use-case-adaptive, Relatively Fork-free Approach of Chain Extension.

In that sense, VeUSD could become one of the first products to leverage the power of this blockchain post the update.

VeChain’s Own Stablecoin, Potential Benefits And Concerns

The VeChain community celebrated the announcement. Recently, a user called “EffortCapital” proposed the possibility for the Foundation to create an algorithmic stablecoin, such as LUNA with VeThor Energy (VTHO) as collateral.

Thus, creating a burning mechanism, similar to the one introduced in Terra with the Colombus-5 upgrade. This mechanism supports a constant demand for the underlying asset and contributes with its appreciation.

Proposal for #Vechain Foundation to create an algorithmic stablecoin backed by $VTHO seignorage style (like LUNA).

More VUSD demand -> burn VTHO -> value accrual to $VET@PeterZh47977516 @sunshinelu24

— D⚡️ (🏌🏻,⛳️) (@EffortCapital) December 30, 2021

This idea saw interest from Sunny Lu, CEO at VeChain. Via Twitter, he asked the community for a tokenomics design for the potential token.

However, not everyone in the community agrees with a stablecoin as the one announced by the Foundation. Some believe VeUSD could change the dynamics in the ecosystem and replaced VTHO, the utility used to power transactions on this blockchain.

Other straight out said that the Foundation and the blockchain has “failed to fulfill their core products”. The network has been implemented in supply chains, and other corporate sectors, but is has rarely focused on developing a DeFi ecosystem.

This approach seems to be changing, as mentioned, with the new upgrades, the DeFi related products, and the stablecoin. Despite the detractors, most users seem to have taken the announcement as bullish.

Related Reading | VET Breaks Major Trend Line, Why VeChain Could See Massive Explosion

The Foundation will share more details in days to come, until then everything remains as speculation. As of press time, VET trades at $0.085 with a 1.95% loss in the past day.

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