LUNA Holds Ground Over $90, Do-Kwon Hints At Factors Behind Rally
March 23 2022 - 2:00PM
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LUNA, Terra’s native cryptocurrency, remains on an upward
trajectory. The cryptocurrency follows the general market sentiment
and is one of the best performers in the crypto top 10. Related
Reading | Terra (LUNA) Surpasses Ethereum Becoming Second Most
Staked Asset This trend could continue in the short term, but some
indicators point to caution. In the long term, the outlook seems
clearer. At the time of writing, Terra’s cryptocurrency trades at
$94 with sideways movement in the last 24 hours and 6% profit in
the past week. Do Kwon, Terra Co-Founder has become one of the most
popular individuals in the crypto space. Very active on social
media platforms, Kwon recently presented one bullish factor for the
long-term survival of LUNA and the Terra ecosystem. According to
Kwon, the crypto market will increase its demand for decentralized
stablecoins, making Terra’s native stablecoin UST grow further.
This stablecoin and LUNA operate with a burning mechanism. Whenever
the demand for UST increases, the mechanism burns LUNA to increase
the stablecoin’s supply and vice versa. Unlike competitors, such as
Tether (USDT) and USD Coin (USDC), UST is decentralized, as Kwon
reiterated. This makes it less vulnerable to single points of
failure, government censorship, and other external vulnerabilities.
This is probably the reason Kwon seems certain about UST’s future
growth. Via his Twitter account, Kwon said: UST ‘s grew because its
sovereignty is the only sensible model to scale decentralized
money. The Anchor Protocol, a Terra native product, offers UST
holders the opportunity to earn a 19% APY. This has been one of the
most important factors behind the surge in demand for the UST
stablecoin. In less than a year, UST has climbed to the top 15
cryptocurrencies by market cap and to the number 4th position in
terms of stablecoin market cap. If the demand for UST continues,
the entire Terra ecosystem will benefit. LUNA Build To Withstand
Crypto Winter? The biggest concern about Terra and UST is Anchor
Protocol’s capacity to sustain its APY, currently one of the
highest in the market. Pedro Ojeda, a co-founder at SplitBrick,
pointed out the mechanism to mint the stablecoin has been designed
to protect Anchor: Luna staking yields stablecoins+Luna. This has a
beautiful property in which [ unlike ETH, BTC, AVAX etc whose
staking return depends purely on coin price ] as Luna price drops,
yield goes up naturally since (stablecoin+Luna)/Cheaper Luna =
higher APR. In the short term, Terra’s native crypto could face
some hurdles to reclaim previous highs. Data from Material
Indicators (MI) suggest small investors have been buying the recent
rally. However, investors with asks orders of around $10,000 have
been suppressing price action keeping LUNA in a tight range.
Bitcoin could be the key for future appreciation on lower
timeframes. If the benchmark crypto can break above $43,000, LUNA
and other altcoins could follow. Related Reading | Mars Protocol To
Launch On Terra, But Why MARS Has Seen A Massive Dump BTC’s price
faces its own difficulties with a TD Sequential indicator flashing
a sell signal on the daily chart and with MI’s trend precognition
pointing downwards on the same period.
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