THORChain Convert Debt into Equity: What about RUNE Holders Fate

THORChain (RUNE) has taken a bold step to address its $200 million debt crisis by converting unserviceable debt into equity through a new token, TCY (Thorchain Yield). This strategic move follows the suspension of THORFi services on January 23, 2025, due to financial instability. While this decision aims to stabilize the ecosystem, the market response has been mixed, with RUNE experiencing sharp volatility.

THORChain’s Debt-to-Equity Move
The newly introduced TCY token will be issued at a rate of 1 TCY per dollar of defaulted debt, effectively turning affected lenders and savers into equity holders. To further support this transition, THORChain plans to create a RUNE/TCY liquidity pool with an initial $500,000 backing, pricing TCY at $0.10 per token. Additionally, TCY holders will receive 10% of THORChain’s revenue indefinitely, providing a long-term recovery mechanism.

Despite these efforts, concerns linger regarding the timeline for full financial recovery. However, THORChain’s core functionality—cross-chain swaps—remains intact, ensuring continued utility for its users. Market sentiment, however, reflects uncertainty, as seen in RUNE’s price action.

Technical Outlook: Can RUNE Recover?
Following the debt-to-equity announcement, RUNE has exhibited mixed performance. Initially, it plunged 10% within 24 hours, extending its 30-day decline to nearly 50%, in line with the broader market downturn. However, as of the latest data, RUNE is showing signs of recovery, posting an 11% gain and trading within a moderate zone.

Key Levels to Watch:
- Relative Strength Index (RSI): Currently at 38, indicating potential oversold conditions and a buying opportunity.

- 38.2% Fibonacci Retracement Level: The $3.58 price mark aligns with this critical resistance; a breakout above this level could fuel a bullish rally.

- 1-Month High Target: If momentum sustains, RUNE could push towards $5, the next major resistance level.

Conclusion
THORChain’s move to convert debt into equity is a double-edged sword. While it provides a structured approach to managing financial challenges, investor confidence remains uncertain. The success of the TCY token will heavily influence market sentiment around RUNE in the coming weeks.

As the market digests this pivotal restructuring, all eyes remain on RUNE’s price action and the effectiveness of THORChain’s recovery strategy.