Key Takeaways:
- LUNC price rally has stagnated after rising vertically over the past few days.
- Interest in the beleaguered project seems to be increasing.
- However, Terra Classic still has challenges in its path to becoming mainstream crypto again.
NEW DELHI (CoinChapter.com) — Troubled crypto platform Terra Classic’s native token LUNC has had an interesting few weeks. LUNC price rose more than 195% between Aug 23 and Sept 1 before the rally burned itself out.
Prices are currently moving laterally. On Sept 2, Terra Classic’s price rose to new heights as it touched $0.00041 for the first time since Terra’s rebirth.
However, LUNC prices dropped immediately as traders started selling to book profits. The long upper wick on Sept 2’s daily candle highlights the hold bears have on LUNC prices.
Although LUNC supporters continue to exclaim the Terra Classic will go to the moon, the token still has a long way to go. Meanwhile, LUNC’s relative strength index continues to be in the overbought region, with a value of 83.53 on the daily chart.
RSI measures the magnitude of recent price changes to analyze overbought or oversold conditions. Traders often consider overbought RSI values as a sell signal, which seems a probable reason behind the LUNC price’s rally stalling.
Terra Classic is the ruin left behind when Terra’s algorithmic stablecoin, UST, imploded earlier this year. The incident dragged down the platform’s native token LUNA, as its prices collapsed to nearly zero from $80 within days.
The LUNA-UST fiasco was one of the biggest disasters in crypto history, with nearly $40 billion wiped from the market.
What Led To The Terra Classic Price Rally?
A likely reason behind the recent LUNC price rally might be a network upgrade introduced by Terra Classic developers. The V22 upgrade introduced staking on the network, and it seems the announcement has garnered overwhelming interest so far.
The Terra Classic news generated great interest, with the platform reporting 101 billion LUNC staked within six hours of the upgrade going live on Aug 27.
Furthermore, the market cap of LUNC crossed above the $1 billion threshold recently, with volume reaching nearly $300 million. Moreover, the Terra Classic team claims they are working to re-introduce a new stablecoin, USTC.
Besides the staking, the developers also plan to mass burn tokens to increase the scarcity of the Terra Classic tokens. As such, investor interest in the project is gaining. With the staking and burning mechanisms in place, more investors will likely jump on the LUNC bandwagon.
BUT, LUNC Still Has Some Issues To Solve
One major problem with the reborn Terra project is the absence of any system that might prevent another systemic collapse of the entire ecosystem. A lot of failsafe might result in spoiling the mood of specific investors.
Moreover, the number of Terra Luna tokens is a staggering 6.5 trillion. Even when the staking and burning mechanisms are in place, it will be some time before LUNC’s supply is down enough to affect the token’s prices.
LUNC market cap would need to reach $650 billion, a rise of 38,235% from current levels, for the token to reach a $0.1 per LUNC token price label. It seems unlikely to happen anytime soon, no matter how frantically Terra Classic supporters try to support the token’s rally.
At present, a major challenge for the project and token is to convince investors that it has a future, and earn the trust of both retail and institutional investors.
LUNC was trading at $0.00025, down 3.6% on the day at writing.
