NOIDA (CoinChapter.com) — Terra Classic (LUNC), the offspring of the Terra Labs debacle, has been on the rise lately, with the token reaching its highest level in 2024 on March 2.
Terra Classic (LUNC) refers to the original blockchain and cryptocurrency of the Terra ecosystem, which became “Terra Classic” following the May 2022 crisis in which the platform’s algorithmic stablecoin, TerraUSD (UST), collapsed and de-pegged, leading to a drastic drop in the value of its sister token, LUNA.
In response to the collapse, the Terra community decided to fork the blockchain, creating a new Terra blockchain (Terra 2.0) and leaving the original chain as Terra Classic.
Terra Burns Fuel LUNC Gains
The reason behind the token’s recent rally was the recent token burn event by Binance on March 1, which removed 2.21 billion LUNC tokens from circulation. The action was part of a broader strategy to reduce the total supply of the Terra Classic token.
Token burns are usually bullish as they enhance an asset’s value by reducing its supply. Hence, if demand for the token rises, the reduced supply pushes up its prices.
Per the LUNC burn tracker, the project has burned over 102 billion tokens from its total supply of 6.8 trillion LUNC tokens. Of the total burned tokens, users burned nearly 3.1 billion tokens in the last seven days.
Moreover, the token’s recent rally helped Terra Classic’s market cap cross the $1 billion mark, per CoinMarketCap data.
Though LUNC’s recent bull run highlights traders’ interest in the token, only burn events might not be enough to help Terra Classic continue its bull run. Moreover, the current rally likely comes from traders manipulating markets to book profits.
LUNC Price Drops As Bears Book Profits
Meanwhile, LUNC rally stalled on March 3 after bears started booking profits as Terra Classic prices reached the supply wall near $0.0002. Despite a late push from the bulls, evident from the long lower wick, LUNC price failed to overcome the bearish pressure.
Breaking above the immediate resistance might help LUNC price target the resistance near $0.000245 before retreating.
Conversely, a failed rally could see LUNC price test the 20-day EMA (red wave) support near $0.00014. Moreover, breaching the immediate support might result in Terra Classic price dropping to the support near $0.0001 before recovering.
The RSI for LUNC remained overbought, with a score of 75.02 on the daily charts.
