Last Update: January 14th, 2022

After exponential growth last year, 2022 presents an exciting year for LUNA fans. Market experts predict that the Terra network will play a crucial role in the DeFi space this year. Pantera Capital CEO, Dan Morehead, commented on LUNA, saying that ”It is growing at a rapid rate. We think it is one of the most promising coins for the coming year, so many people are just starting to discover it and are just starting to trade it.” The CEO expects Terra to continue gaining traction, saying he expects it to venture into more interesting things that will spur growth.

Having hit a price above $100 in 2021, we forecast that LUNA/USD will reach $200 in 2022 and $300 in the next two years. Our price prediction for the next three years puts LUNA/USD at not less than $300, supported by the technical and fundamental analysis. 

LUNA/USD Price History

Terra (LUNA/USD) remained subdued, trading below $10 until March 2021, with the daily trading volume reaching as high as $842.80 million. The pair surged to $21.88 on March 21, 2021, before settling into a consolidation pattern. LUNA/USD consolidated between $18 towards the end of March, and $12 as of May. What followed was a plunge in the price of LUNA/USD, from $15.74 on May 19, 2021, to a low of $4.09 on May 23, 2021, as it shed 284% in about five days. The bearish sentiment kept LUNA/USD in a consolidation pattern between the end of May and July, when it traded under $8.64, with a 24-hour trading volume of $445.15 million.

Recent Price Changes

LUNA/USD opened the last quarter of 2021 in a consolidation pattern. The pair traded at $41.70 on October 1, 2021, and remained range-bound, with $37 acting as support and $54 as resistance. The pair then put on some bullish momentum on November 26, surging from $40.79 to a high of $75.37 at the start of December 2021. The upward momentum led to gains of 83.87% in about two weeks, but the pair retracted to $53 on December 13, before skyrocketing to an all-time high of $105 on December 26. The rally turned by 87.83% in 10 days. At the time of writing, LUNA/USD was trading at $87.59, coming from a market recovery.

Recent LUNA/USD Price Changes

LUNA/USD Live Chart

Factors Driving Adoption

Importance of Stablecoins

The surging importance of stablecoins has boosted the market capitalization of Terra and a resultant surge in LUNA. Stablecoins would remain vital in the cryptocurrency space since they bridge digital assets and fiat currencies. Terra offers price-stable cryptocurrencies that can facilitate global transactions payments. The solution has seen adoption at the institutional level. Terra announced a partnership with Chai, a South Korean payment firm, in 2019. The protoco’s automatic, elastic monetary supply offers a cheaper option in the cross-border exchange and low charges. If Terra could sustain the rapid adoption of its solution, then LUNA could explode further and achieve higher price levels.

Colombus-5 Upgrade

Terra’s Columbus-5 Upgrade went live in 2021, strengthening confidence among LUNA investors. The upgrade supports an Inter-Blockchain Communication standard. IBC allows users to transfer assets like LUNA, UST from Terra to other protocols and vice versa. The upgrade also introduced a deflationary measure. Whenever UST tokens are minted, LUNA is burned. This is a change from the initial tokenomics structure. Prior to the upgrade, when UST rose above $1, users could transfer $1 worth of LUNA to a community pool in exchange for an equivalent amount of UST. The completion of the upgrade is a positive trajectory to the network that could sustain a positive momentum moving forward.

Developments in the Terra Ecosystem

Terraform Labs, the company behind, Terra has created multiple initiatives to advance the growth of the network. The initiatives are targeted at rolling out an enhanced financial system that is decentralized from the influence of traditional financial institutions. Terra has customized itself in providing tools for developers to create decentralized applications. As the LUNA network gains popularity among developers and investors, LUNA will maintain a steady upward momentum.

Risks Factors in Terra Luna

Price Volatility

LUNA price could be affected significantly if the network cannot maintain the value of its stablecoins pegs. The performance of LUNA is tied to the price movements of the stablecoins pegged to it. The stablecoins like dollar-backed UST in the Terra network could adversely affect LUNA price in a bear market. Terra also faces competition from other blockchain decentralized finance networks like Etheruem and Binance Smart Chain. If the competition becomes stiffer, then LUNA could face a hurdle.

Regulatory Risks

The US Securities and Exchange Commission has raised concerns about whether Terra is dealing in an unregistered security offering. Overall, the rise in stablecoins has attracted the attention of the regulators, with some jurisdictions around the world calling for the immediate creation of policies to control the issuers of stablecoins. If the regulations affect the operations of stablecoins worldwide, Terra would be affected, and the price of LUNA may remain subdued in the long term. Terra is less decentralized compared to other networks like Ethereum. This aspect could compromise the platform’s security in the long term.  

Competition 

Terra is still in the early stages of development compared to other established networks like Ethereum and Binance Smart Chain. The network’s stablecoins are yet to gain popularity and outcompete those from other issuers. Alternative global payments protocols like XRP, Steller and Celer also rival the operations of Terra. XRP ranks ahead of Terra with a market capitalization of about $35 billion, while Stellar has a market capitalization of $6 billion. Both compare to Terra’s market cap of $25 billion. Terra needs to cover enough grounds to sustain the price of LUNA.

LUNA/USD Daily Chart Shows a Bullish Momentum of Clear Higher Highs and Higher Lows

While most crypto tokens took a breather since November 2021, LUNA/USD only corrected briefly before proceeding to a new all-time high of $105 on December 28. The rise saw the token become a top ten cryptocurrency by market cap. From the daily chart below, LUNA/USD has maintained a clear uptrend of higher highs and higher lows, only correcting briefly to the previous tops. Now, LUNA/USD is correcting from its ATH of $105 with no end in sight as the bullish momentum holds in place.

On the daily chart, a RSI reading of 55 shows that LUNA/USD is neither overbought nor oversold at the current level which could attract buyers again. Both the 50 moving average (blue) and 100 moving average (red) support price meaning that the bullish momentum is far from over.

LUNA/USD Weekly Chart Shows a Parabolic Movement – $80, $55 and $22 Key Levels

On the weekly chart, LUNA/USD bullish momentum can be equated to a parabolic movement. Corrections to the downside were too brief while bullish jumps were rapid, leaving limited price action levels which we could use to predict key market action points. Again, the 50 moving average and 100 moving average act as support, with the price remaining above the trendline.  On the other hand, an RSI reading of 70 may suggest that LUNA/USD is overbought. The RSI already touched a reading of 81 before the price corrected and is still proceeding down.

Despite being in the overbought zone, LUNA/USD remains on an uptrend as shown by the bullish momentum and moving averages. A further correction is expected in the next few days before new buyers join to push the price above its ATH.  

LUNA/USD Key Levels to Watch

2022 presents an interesting year for LUNA/USD given the strong surges the token has undergone in 2021. Whereas there is no immediate clear support, the price zone at $80 remains the potential area where LUNA/USD could settle in the ongoing correction. It is the level where the token has shown some indecision and buyers should keep an eye on it for a potential reversal.

Other key levels to watch should LUNA/USD fall below $80 are $55 and $22. The level at $22 is the more established support but we do not project the price to fall this much if Terra ecosystem continues to enjoy the massive adoption it started in 2021.