Key Takeaways:
- Terra defied the ongoing market crash caused by the Ukraine-Russia tensions.
- Analyst predicts a $200 price target for LUNA by end of 2022.
NEW DELHI (CoinChapter.com) — Terra (LUNA) token has remained aloof of the impact of the Ukraine Russia conflict, even as the wider crypto market crumpled around it.
LUNA prices jumped 38.7% in the current week, even as Bitcoin (BTC), Ethereum (ETH), and other cryptocurrencies fell. The increasing demand for UST is a possible reason for the Terra token’s safe haven-esque behavior, which used to be Bitcoin’s domain.
Terra’s LUNA And UST Connection
UST is Terra network’s stablecoin, which works with LUNA to create and burn UST and achieve stability algorithmically. Terra achieves stability by incentivizing the market to burn or create more UST, increasing or decreasing the circulating supply.
For example, users would need to convert an equivalent amount of LUNA tokens to mint $100 of TerraUSD (equal to 100 UST at peg). If LUNA is priced at $50 per coin, a user would need 2 LUNA tokens.
Terra algorithm would then burn the 2 LUNA tokens to mint 100 UST. Previously, Terra burned only a part of the tokens users provided for UST. However, with the introduction of the Columbus-5 update, Terra burns 100% of the LUNA tokens used for minting UST.
Also Read: LUNA price jumps 17% after Terra raised $1B for Bitcoin-denominated stablecoin reserve.
As a result, increasing demand for the TerraUSD stablecoin would invariably increase. Murray Rudd, a crypto economist, predicted a price model for the LUNA token that forecasts a $203 price target for the Terra token by the end of 2022.
Furthermore, LUNA’s rebound also took bullish cues from the news that Luna Foundation Guard (LFG) raised $1 billion through LUNA token sales. Three Arrows Capital and Jump Crypto led the sale, with DeFiance Capital, Republic Capital, GSR, Tribe Capital, and others.
The non-profit organization supporting the Terra ecosystem, LFG, shared its plans to build a Bitcoin denominated UST Forex Reserve. In detail, the new reserve would help keep UST stable during extreme market volatility.
LUNA Price Charts
Meanwhile, LUNA prices continue trending upwards for the 5th day in a row, as LUNA moved from the Feb 21’s low of $48.97 to reach an intraday high of $67.97 on Feb 25. Furthermore, Thursday’s candle with the long lower wick indicates bulls are optimistic of LUNA’s fortunes, aggressively buying dips.
The Terra token’s current rally took it above its 50-day and 100-day Moving Average (MA) lines, making it bullish across all time horizons. In addition, LUNA has been trading above ascending trendline support since Aug 2021.
Terra has tested the ascending support four times over the last six months. LUNA’s 200-day MA line (red wave) reinforces the trendline support. If the rally continues, LUNA would likely try to flip immediate resistance at $72.6 before challenging the next resistance level near $80.
A sustained uptrend could push LUNA to $89 before prices pare.
Also Read: Terra DAO approves partnership deal with Washington Nationals.
Trend-based momentum oscillator MACD continues to be bullish for LUNA. Though the momentum weakened for a while, bars on the MACD histogram plot the difference between the MACD line (12-day and 26-day EMA difference) and the MACD signal line (9-day EMA of MACD) are now expanding.
Expanding histogram bars indicate strengthening bullish momentum for the Terra token.
Conversely, if bulls start profit booking, LUNA could fall to support near its 50-day MA (purple wave) at $61.7. The Terra token has also held its 26-day exponential MA (white wave) near $56.6 as support.
Finally, the 200-day MA (red wave) and the ascending trendline form a support confluence for LUNA near the $50 price level.
Additionally, the relative strength index for Terra is currently neutral, clocking 63.17 on the daily charts. However, the RSI trendline is moving upwards, which puts LUNA in danger of becoming overbought. Overbought RSI usually indicates a trend reversal in the works.
At the time of writing, LUNA was trading at $65.95, up 1.08% on the day.
