LUNA/USD Technical Analysis
About Terra LUNA
Terra's blockchain is a stablecoin platform that allows users to peg stablecoins against fiat-currencies to counter the high levels of volatility among cryptocurrencies - a major detractor keeping the mainstream industry from adopting their use in payment systems worldwide. LUNA is the native token used within the network and is used to stabilize the price of stablecoins operating on Terra. Holders of LUNA tokens can also vote on proposals and participate in the governance of the Terra ecosystem.
Terra's ecosystem is made up of two kinds of tokens: Terra stablecoins and the native token LUNA. The Terra Protocol leverages a PoS-based consensus mechanism and LUNA is used for staking purposes within the network to mine transactions taking place on the network. Terra's stablecoins, on the other hand, are pegged to leading fiat currencies, including US dollar, Euro, Chinese yuan, Japanese yen, Pound Sterling, Korean won and even IMF's SDR. The developers will continue to add more stablecoin options based on users' votes going forward.
As of early October 2021, Terra's LUNA is the 11th largest cryptocurrency based on market capitalization which has offered an ROI of over 15,000+ over the past one year. The explosive growth of the DeFi space and the sustained interest among investors in this market can further spur investor interest and user adoption of this cryptocurrency and keep its value on the rise in the coming months.
Terra LUNA Breakdown
Terra's unique technology aims to increase the adoption of stablecoins pegged to fiat currencies, making it easier for consumers and businesses to leverage the benefits of cryptocurrencies without worrying about the high levels of price volatility the market is notorious for. It maintains the 1:1 peg on its stablecoins using an algorithm that adjusts the supply of stablecoins to their demand within the ecosystem. This is done by incentivizing LUNA holders to swap their tokens against stablecoins and vice versa while offering them profits from exchange rates to increase or decrease the supply of stablecoins and maintain price stability as a result.
Since its inception, Terra has successfully partnered with payments platforms around the world, especially across Asia-Pacific, giving them an opportunity to benefit from the decentralized, swift and low cost transactions on its blockchain network. Terra makes money by charging a 2-3% fee on each transaction from participating merchants. In addition, the Terra Alliance - a group of businesses and platforms working to drive up the adoption of Terra's technology has partnered with e-commerce platforms across the world, driving more users to the network.
Terra LUNA History
Terra traces its origins back to January 2018 when its co-founders Daniel Shin and Do Kwon came up with the concept to drive mass adoption of blockchain infrastructure and cryptocurrencies across mainstream sectors. They realized that price stability and adoption remained the most important features required for mass adoption of the decentralized technology and focused on a way to leverage stablecoins in order to do this.
Terra's mainnet launch occurred in April 2019, along with the release of blockchain tools, including the testnet, wallet and a block explorer. In June 2019, the team of developers issued the Columbus-2 upgrade which updated its oracle, brought in atomic swap safeguards, bidirectional LUNA spread fees, and more. The Columbus-4 upgrade in 2020 enabled the important smart contracts feature on the blockchain. In October 2021, Terra successfully completed the rollout of another major network upgrade - Columbus-5 which brought interoperability to Terra.
Terra LUNA Price Factors
One of the biggest factors driving the price of Terra's LUNA is investor sentiment towards the crypto market in general and specifically towards the LUNA token or Terra's capabilities. A positive market sentiment overall tends to increase investor interest in buying cryptocurrencies, and is usually supported by bullish moves in market leaders such as Bitcoin and Ethereum. On the other hand, a risk-off sentiment drives investors away from cryptocurrencies which are viewed as riskier instruments in global financial markets, and the resulting sell-off can drag the LUNA price lower.
The LUNA rate also fluctuates on the back of adoption of Terra's ecosystem and its stablecoins. Whenever the demand for stablecoins on Terra's network goes up, the supply of LUNA is tapped to generate more stablecoins, driving up its value. On the other hand, a reduction in demand for stablecoins or developments that can cause the value of the pegged token to fall would result in more of the token being converted to LUNA and drive LUNA's rate lower in turn.
The LUNA price can also be affected by news about its listing on crypto exchanges. Higher accessibility to the token for trading on platforms and exchanges can potentially drive up investor interest in the crypto coin, supporting it value and causing it to head higher. On the other hand, if its popularity as a trading instrument wanes and exchanges delist the token, the LUNA rate could witness a decline.
Trading Terra LUNA
If you would like to start trading Terra's LUNA, a great starting point would be to read up on how the crypto market operates, the technology behind cryptos in general, how stablecoins work and what makes the Terra ecosystem worth watching out for. In addition, it would help to keep an eye on all latest news updates related to the crypto market and surrounding the adoption of Terra's blockchain among projects as well as investors.
We also recommend finding a reliable crypto exchange or platform that supports LUNA trading. Open an account with a reliable option based on whether they meet your requirements. If you are new to crypto trading, it would help to try placing mock trades on a demo account before investing your capital.
Follow a reliable trading signals provider and news website to gain trade ideas and recommendations on how to trade LUNA once you have gained confidence and are ready to dip your toes into this space.
LUNA/USD - FAQs
Blockchain protocol Terra offers users the option to create and utilize stablecoins pegged to fiat currencies to benefit from the ease and convenience offered by digital currencies without worrying about the high levels of price volatility and unpredictability in this space. LUNA is the native token within the Terra ecosystem, used as a governance token and also leveraged to maintain price stability of the stablecoins.
You can trade LUNA by registering an account with a reliable crypto exchange or broker that lists the token among their offerings. Once you have successfully opened your account, you can convert your trading capital from fiat into LUNA or other cryptos and use it to buy or sell LUNA based on the price action in the market.
You can store Terra’s LUNA securely in supported crypto wallets. While most crypto exchanges allow you to hold your tokens on the platform, they are at greater risk of being hacked and stolen. A digital wallet offers higher security and can be of different types, including web-based, online or hard (offline) wallet. Some of the leading digital wallets that you can store your LUNA tokens in include Ledger Nano S, Gemini and Terra Station.
LUNA is the native token for Terra, helping maintain price stability of stablecoins on its ecosystem and is also used for governance of the blockchain. It cannot be used outside of the blockchain, but can be traded against other cryptocurrencies and fiat currencies on crypto exchanges and trading platforms that list the token.
Most countries around the world allow their citizens to buy, sell, trade and hold cryptocurrencies, including LUNA. However, in a few countries, cryptocurrency use and purchase is banned. We recommend you read up the latest rules concerning cryptocurrency use and trading in your respective country before investing in the LUNA token.
The UK has not enforced any ban or exclusive regulation on cryptocurrencies, including Terra’s LUNA and allows its citizens to purchase and trade the digital token. However, rules are subject to change from time to time, so it is advised that you look up the latest news on UK’s crypto regulations before getting started with trading LUNA.
As high as its potential is, Terra’s LUNA faces significant risks as the entire crypto market remains mostly unregulated, which makes it highly volatile and unpredictable. Any sudden changes in regulations, e.g. ban on cryptocurrencies, can cause you significant loss if you invest too heavily in LUNA and other digital currencies. In addition, stablecoins are under increased regulatory scrutiny the world over, making Terra especially vulnerable to risks than most other cryptocurrencies, especially the major ones.