Terra’s LUNA Getting Ready For Price Correction After Latest Rally?
Aiswarya Gopan • 2 min read
Terra’s LUNA is one of the few coins that escaped unscathed through the latest crash in the wider crypto market that happened on December 4, and is continuing to trend higher, breaking into the top 10 cryptocurrencies by market cap. At the time of writing, LUNA/USD is trading at around $64.72.
The token that ensures stability of stablecoins on the Terra blockchain, including the most popular UST coin, has been on quite the bull run ever since the developers announced a new network upgrade proposal. In addition, the higher demand for the UST stablecoin has ensured a faster burn rate for LUNA tokens, driving up its value in turn.
Terra’s blockchain supports stablecoins pegged against fiat currencies and uses its native token LUNA to maintain the price stability of its algorithmically-backed stablecoins, such as the TerraUSD (UST). The spike in LUNA’s price over the past week came on the back of a proposal within the community to overhaul Terra’s TrackTerra tax and reporting app, which can make it easier for the token holders to export their transaction history to popular tax software programs for easier reporting of their crypto activities. This comes at just the right time as several countries, including the US, are considering enforcing regulations that would require crypto investors to report their holdings and investments in digital assets.
Terra’s LUNA has been registering strong gains despite Terraform Labs – the firm behind the development of the blockchain, being in the crosshairs of the US SEC which alleges that the platform is selling unregistered securities. Several US officials, including SEC Chair Gary Gensler, have repeatedly cautioned against stablecoins and their power to upend fiat currencies and traditional finance, and not in a good way.
Analysts have coined Terra as the latest trend in the crypto market, following the explosive success of other peer such as Solana and Avalanche lately. Terra is fast becoming a popular choice not only for its UST stablecoin but also for its DeFi efforts, in addition to rolling out significant network upgrades that ensure higher efficiency. The increased on-chain activity on the blockchain is the key driver of the bullish moves in the LUNA token in recent sessions.
LUNA/USD Technical Analysis
On the 4-hour chart of LUNA/USD, the smallest moving averages and leading technical indicators MACD and momentum are exhibiting a bearish bias. However, the remainder of MAs are suggesting an interest among buyers in the market.
Terra’s LUNA is holding just under the pivot at $64.80 and an uptick in selling pressure could see further downside. If this happens, keep an eye on the immediate support at $51.15 as the sellers could take LUNA down to this level.