Key Takeaways:
- Blockchain payments platform Terra’s native token LUNA is in a strong bullrun.
- Network upgrade and changes to tax liability reporting mechanism are behind the massive gains.
NEW DELHI (CoinChapter.com) — Terraform Labs’ native token, LUNA, blew past memecoin Shiba Inu and DeFi protocol Avalanche to become the 11th largest cryptocurrency by market volume.
Terra’s market cap rose as LUNA raced upwards to chart new ATH on the daily chart. On Friday, Terra fell along with other cryptos as the market reacted to the new Coronavirus variant Omicron reports. However, while other cryptocurrencies had a staggered recovery, LUNA rocketed upwards.
LUNA has performed quite well this year, registering 10,148% YTD gains. Most of the gains come from LUNA’s price action as it entered Aug. However, the Terra crypto’s rise in the last seven days is almost vertical.
LUNA charted an ATH of $70.84 On Dec 3, after jumping 9.3% between low ($64.8) to high ($70.8) levels before prices pared. A continued uptrend might see LUNA challenge resistance at $73 and move up towards $78. Though, bulls would likely try to consolidate prices at current levels before trying a move upwards.
In case of the uptrend losing steam, LUNA would try to consolidate above immediate support at $61.4. Furthermore, if retail traders start a sell-off, prices could decrease to $55 before recovering. Key support for LUNA is near its 26-day EMA trendline at $48.
Recommended: Terra’s LUNA jumped 28% in a week, while Terraform Labs is suing the SEC.
The relative strength index moved into overbought regions for the Terra token, clocking 72.98 on the daily charts. Meanwhile, trend-based momentum oscillator MACD charted a bullish crossover on Nov 28 as LUNA registered 14% intraday gains.
Furthermore, bars on the MACD histogram are expanding upwards, indicating the MACD line (difference between 12-day and 26-day EMA) moves further above its signal line (9-day EMA of MACD), forecasting strongly bullish momentum for Terra.
Terra- Firm On Fundamentals
Terra ended a volatile Nov with a nearly 40% increase in its prices. Moreover, LUNA’s latest bull run comes amid an ongoing dispute between Terraform Labs and the US Securities and Exchange Commission. The SEC alleged Terraform Labs of selling unregistered securities on its platform.
Also Read: LUNA leaps 21% in a week as Grayscale considers adding Terra to its investment products.
Terra uses fiat-pegged stablecoins to run its payments ecosystem, while LUNA helps stabilize the price of TerraUSD (UST), the protocol’s algorithmically-backed stablecoin.
There’s a lot of attention on the Terra ecosystem, be it for DeFi innovation, stablecoin products, a recent network upgrade or Luna staking … [It’s] following in the footsteps of other blockchains like Solana and Avalanche, all which have witnessed explosive gains in the past year.
Antoni Trenchev, co-founder of crypto lender Nexo, told Bloomberg
On Nov 30, investors voted to allow community funding to redesign the network’s ‘TrackTerra’ app. The upgrade would help LUNA holders to share transaction data with different tax software programs. In addition, since governments worldwide are looking for ways to regulate crypto, the new update would help LUNA’s regulatory status.
Moreover, the Terra community recently approved a governance proposal to burn 88 million LUNA from the community pool and swap it for UST. Burning increases scarcity, creating a supply shock that helps drive up the value of the cryptocurrency.
Additionally, the supply reduction coupled with LUNA staking would further boost prices. Several countries have expressed an interest in stablecoins. Since LUNA’s price dynamics depend on UST stablecoin, an increase in stablecoin demand would also help Terra.
Meanwhile, analysts also forecast a bright future for the Terra token. For example, the host of CNBC’s Crypto Trader program, Ran Neuner, believes Terra has the potential to see itself in the list of top 5 cryptocurrencies.
At the time of writing, LUNA was trading at $69.2, up 4.19% on the day.
