Terra price gains 75% in February as $2.57B in LUNA tokens removed from supply


Terra (LUNA) emerged as the most effective performing monetary belongings in February, a month mired by geopolitical conflicts and their unfavourable impacts on the crypto market.

LUNA decouples from the crypto market

LUNA’s worth surged by slightly over 75% to achieve $91.50 on the month’s UTC shut. Compared, the proportion efficiency of different high tokens, primarily Bitcoin (BTC) and Ether (ETH), in the identical interval got here out to be round 12.25% and 9%, respectively.

LUNA/USD versus BTC/USD and ETH/USD weekly worth charts. Supply: TradingView

Curiously, most of LUNA’s positive factors in February surfaced on the month’s final day. The Terra token jumped 26% on Feb. 28, partly because of comparable upside strikes elsewhere within the crypto market. As an example, BTC and ETH rose 14.50% and over 11.50%, respectively, on the identical day.

Whereas nonetheless constructive at 0.09, LUNA’s correlation with Bitcoin has come off these days after hitting 0.81 on Feb. 21, information from TradingView exhibits. A correlation of 1 implies that two belongings are in lockstep, whereas 0 exhibits that their worth strikes independently.

LUNA/USD correlation coefficient on the every day chart. Supply: TradingView

Terra’s LUNA/BTC pair additionally confirmed its rising valuation in opposition to the highest cryptocurrency.

Intimately, the LUNA/BTC pair rose by over 56% to 21,171 satoshis in February, suggesting merchants sought hedge within the Terra token as Bitcoin’s correlation with a bearish inventory market grew, reaching 0.70 earlier this yr.

Bitcoin correlation with shares since March 2021. Supply: Bloomberg 

As to why merchants appeared to have thought of LUNA as their interim secure haven within the first place, the reply may lie in Terra’s token economics.

29M Terra tokens destroyed

Information fetched by analytics platform Sensible Stake confirmed that Terra protocol burned 29 million LUNA tokens price $2.57 billion not too long ago. That occurred as the availability of TerraUSD (UST), a stablecoin backed not by the U.S. greenback however LUNA, elevated from round 11.26 million on Feb. 1 to virtually 12.92 million on Feb. 28, marking a rise of practically 14.75%.

LUNA and UST provide all throughout February 2022. Supply: Sensible Stake

Merchants take into account an growing UST provide a bullish catalyst for LUNA, primarily due to the so-called UST-LUNA token mannequin. Intimately, Terra preserves UST’s peg of USD by way of an elastic financial coverage. So when the worth of UST goes above $1, Terra incentivizes its customers to burn LUNA and mint UST.

However when the UST provide contracts, LUNA valuation decreases because of a slowdown within the burning mechanism. All and all, LUNA’s valuation tends to rise alongside UST’s provide.

On Feb. 22, the Luna Basis Guard (LFG) — a nonprofit group supporting the Terra blockchain ecosystem, introduced that it had raised $1 billion in a LUNA token sale spherical led by Three Arrows Capital, a enterprise capital agency backed by Ethereum-skeptic Su Zhu and Soar Crypto, a buying and selling group recognized for aiding Solana’s cross bridge platform Wormhole in replenishing their stolen $300 million.

LFG revealed that it could use the proceeds to construct a “UST Foreign exchange Reserve,” elevating prospects of boosting the stablecoin’s provide by one other billion-dollar price of LUNA-backed tokens.

LUNA’s worth has risen by practically over 90% because the LFG’s announcement. In distinction, the entire market capitalization of all of the cryptocurrencies mixed has rallied by simply 13% in the identical interval, underscoring that crypto merchants have been flocking into the Terra market.

What’s forward for LUNA?

Terra’s technical outlook appears skewed to the upside owing to an ongoing “bull flag” breakout transfer.

Bull flags are bullish continuation patterns that seem when the worth consolidates decrease inside a descending channel after a powerful transfer upward. Finally, it breaks out of the channel vary to the upside, with a worth goal ideally at size equal to the scale of the upside transfer that preceded the bull flag formation.

LUNA seems to have entered the ultimate section its bull flag setup, as proven within the chart beneath. It now eyes a run-up towards $120, an all-time excessive for Terra if achieved.

LUNA/USD three-day worth chart that includes bull flag setup. Supply: TradingView

On the flip facet, LUNA’s volumes on the three-day chart seem weak, displaying the continuing upward retracement stays much less convincing to merchants. Its quantity profile additionally exhibits little historic exercise above $70.

Associated: $300M in crypto liquidations accompanies Bitcoin’s surge to $44K

Moreover, LUNA’s every day relative energy indicator (RSI) has been flashing an “overbought” warning, noting that it may go a level of worth correction within the coming classes.

LUNA/USD every day worth chart that includes RSI. Supply: TradingView

Nonetheless, in the long run, the Terra token’s path of least resistance stay to the upside, with its year-over-year efficiency in opposition to the greenback popping out to be over 1,200% as of Feb. 28, 2022.  

The views and opinions expressed listed below are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer includes danger, it is best to conduct your individual analysis when making a choice.



Source link

Comments are closed.

bitcoin
Bitcoin (BTC) $ 23,963.42
ethereum
Ethereum (ETH) $ 1,888.86
tether
Tether (USDT) $ 1.00
usd-coin
USD Coin (USDC) $ 1.00
bnb
BNB (BNB) $ 325.24
xrp
XRP (XRP) $ 0.379528
cardano
Cardano (ADA) $ 0.529907
binance-usd
Binance USD (BUSD) $ 1.00
solana
Solana (SOL) $ 42.98
polkadot
Polkadot (DOT) $ 9.20
dogecoin
Dogecoin (DOGE) $ 0.071189
avalanche-2
Avalanche (AVAX) $ 28.81
staked-ether
Lido Staked Ether (STETH) $ 1,829.14
shiba-inu
Shiba Inu (SHIB) $ 0.000012
dai
Dai (DAI) $ 1.00
matic-network
Polygon (MATIC) $ 0.922656
tron
TRON (TRX) $ 0.070583
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 23,997.43
ethereum-classic
Ethereum Classic (ETC) $ 41.55
okb
OKB (OKB) $ 18.75
leo-token
LEO Token (LEO) $ 4.71
litecoin
Litecoin (LTC) $ 61.80
near
NEAR Protocol (NEAR) $ 5.72
chainlink
Chainlink (LINK) $ 8.99
uniswap
Uniswap (UNI) $ 9.10
ftx-token
FTX (FTT) $ 30.62
crypto-com-chain
Cronos (CRO) $ 0.151486
cosmos
Cosmos Hub (ATOM) $ 11.74
stellar
Stellar (XLM) $ 0.125388
flow
Flow (FLOW) $ 2.97
monero
Monero (XMR) $ 159.04
bitcoin-cash
Bitcoin Cash (BCH) $ 143.13
algorand
Algorand (ALGO) $ 0.360701
vechain
VeChain (VET) $ 0.032865
filecoin
Filecoin (FIL) $ 8.44
apecoin
ApeCoin (APE) $ 6.92
internet-computer
Internet Computer (ICP) $ 8.15
decentraland
Decentraland (MANA) $ 1.06
chain-2
Chain (XCN) $ 0.088520
hedera-hashgraph
Hedera (HBAR) $ 0.081252
tezos
Tezos (XTZ) $ 1.91
the-sandbox
The Sandbox (SAND) $ 1.32
axie-infinity
Axie Infinity (AXS) $ 18.65
quant-network
Quant (QNT) $ 124.29
theta-token
Theta Network (THETA) $ 1.63
aave
Aave (AAVE) $ 108.88
elrond-erd-2
Elrond (EGLD) $ 65.21
frax
Frax (FRAX) $ 1.00
lido-dao
Lido DAO (LDO) $ 2.60
eos
EOS (EOS) $ 1.31
Shares