What’s Behind The Rally in Terra (LUNA) Today?
Aiswarya Gopan • 2 min read
On Wednesday, Terra’s LUNA is one of the biggest gainers in the crypto market, enjoying double-digit daily gains as the demand for the UST stablecoin and DeFi incentives on the ecosystem surge. At the time of writing, LUNA/USD is trading around $58.72.
LUNA Gains as Demand For Terra’s UST Stablecoin Rises
The native token within the Terra ecosystem has surged to touch a new all-time high during the previous session, powered by increasing demand for its stablecoin UST as well as the multiple incentive programs. The demand for Terra’s ecosystem has been on the rise ever since the Columbus-5 upgrade rolled out in October, ensuring a more stable mechanism to peg the UST against its fiat value. Within a few weeks since the rollout of this major network upgrade, over 93 million Luna tokens have been burnt – a strong indicator of the rising demand for USD. Higher demand for the stablecoin UST also pushes the value of Terra’s native token LUNA higher, and is keeping it supported lately.
During the previous session, the Tera blockchain also saw increased network activity after over 92% of stakeholders participated and voted in favor of a proposal to issue a community grant to overhaul the TrackTerra tax and reporting application, allowing all Terra transactions to be exported to it. It is the first proposal to pass under the new minimum LUNA deposit and reduced voting parameters and will ease reporting requirements even as countries worldwide increasingly look at implementing tax and other regulatory requirements on income from cryptocurrencies.
Another major development powering LUNA’s rise to a new ATH is Terra discussing a proposal that will significantly increase the UST’s liquidity on the Ethereum network over the next six months. Intending to make USD the go-to interchain stablecoin, the proposal outlines how to increase the liquidity of the stablecoin on Curve Finance and discover the best use cases for UST on other leading protocols on the second most popular blockchain network in the world.
Other Fundamental Developments Also Support LUNA’s Surge
In terms of adoption, a new NFT collection Styllar recently released on the Terra blockchain, merging the concept of pop culture and fashion with the latest NFT trend. The culmination of over 12 years of planning by artists, marketing professionals, software developers, web designers and web developers style or is one of the first NFTs to allow users to build avatars and customize their NFT based on their preferences, giving them the option to add personalized items or user traits from the community or the Styllar marketplace and then export their finished deliverables on several social networks, contracts and other web-based platforms.
LUNA is also on a strong uptrend, powered by rumors that leading crypto management firm Grayscale could be exploring an investment product for Terra’s LUNA for serious investors. The firm had initially confirmed that Terra was under consideration about a month ago. Still, expectations have been rising ever since the launch of its Solana-based investment product earlier this week.
LUNA/USD Technical Analysis
Taking a look at the H4 price chart of LUNA/USD, moving averages along with the MACD are suggesting a strong bullish bias. Although, the momentum indicator points to the presence of some sellers as well.
Terra’s LUNA is trading comfortably above the pivot point at $46.07. The price has also crossed two resistance levels at $54.29 and $58.44 respectively. Further buying pressure can see a test of the third resistance at $70.80 next, so keep an eye on this level.