LUNA’s ascending wedge has been forming for over a month and it is now, threatening a potential 46% sell-off. Traders must be cautious of a close below the confluence of the 4-hour 200-SMA (green) and 23.6% Fibonacci level, one which could trigger a bearish outcome. Meanwhile, bulls can aim for an early cut-off at the 38.2% Fibonacci level – A zone that held up a reliable support level in October.
At the time of writing, LUNA was trading at $51.5, up by 4.9% over the last 24 hours.
LUNA 4-hour Chart
Three higher highs set up at $41.5, $49.5, and $61, along with three higher lows at $27.2, $41.3, and $48.4, outlined an ascending wedge on LUNA’s 4-hour chart. Based on the highest peak and the lowest valley within the bearish pattern, LUNA eyed a 47% drawdown from the breakout point. Should LUNA forego its streak of higher lows and weaken below the 200-SMA (green) and 23.6% Fibonacci level, sellers can drive the price all the way to $23.52.
Bulls can counterpunch immediately at the 38.2% Fibonacci level- A zone that enabled a reversal following a double top at $49 in October.
On the flip side, an upwards breakout can be possible if LUNA registers an immediate close above $55, backed by strong volumes. Such an outcome would set LUNA on course for $81.
The 4-hour RSI traded within a steady down channel, forming several bearish divergences with respect to LUNA’s price action. Such signals are commonly observed before a retracement takes place.
Having said that, LUNA could extend its wedge over the near term as the MACD and DMI were still within favorable positions.
LUNA can consolidate close to $55 as the MACD and DMI shift to bearish positions. Once sellers respond to such cues, LUNA would break south of its wedge and set up a potential 47% sell-off.
Traders can go short once LUNA closes below the confluence of its 200-SMA (green) and 23.6% Fibonacci level and set take-profits at $23.5.
LUNA’s price fluctuates after voting to burn R$4.5 billion in tokens
Nothing generates more demand than a reduction in supply. At least that’s what should happen.
Ask Terra, whose community is responsible for maintaining the protocol of the LUNA utility token and stablecoin terraUSD developed by Terraform Labs.
On Tuesday (9), the community voted to burn around 89 million tokens (approximately US$4.5 billion).
After the proposal presented by the co-founder of Terra Do Kwon was approved, the price of the token soared from $50 to over R$54, coming close to its record high of $54.77.
It then went through a mini-market meltdown as nearly the entire crypto market went into the red. Within hours, the price had dropped 14%. LUNA, which has a market capitalization of $23.5 billion, has rebounded to about $48.
1/ The on-chain votes for proposals 133 and 134 to burn the 88.675 million Pre-Col-5 $LUNA in the Community Pool (~$4.5 billion), swapping for $UST using the on-chain swap, and reducing the oracle_rewards_pool distribution window from 3 to 2 years have now passed!— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) November 10, 2021
LUNA is a utility token for decentralized applications (or dapps) developed on the Terra blockchain. One of its main uses is to maintain a 1:1 ballast to Terra’s algorithmic stablecoins.
More LUNA is issued when demand for UST drops; the token is burned when demand for stablecoin increases.
After the successful vote, 520,000 LUNA (equivalent to more than US$25 million) was withdrawn from circulation, as the more than 88 million remaining tokens will be burned over the next two weeks, theoretically increasing the value of LUNA even further. .
This week’s vote matches the larger plan introduced by the Columbus-5 network update at the end of September, which changed the way and timing Terra burns tokens.
After the upgrade, instead of transferring LUNA to a community pool, the LUNA tokens that used to issue stablecoin would be permanently burned. The initiative was created to increase the value of LUNA.
In May, Kwon explicitly considered the Earth Community Pool token burning as a revenue-generating event “to boost initial funding for the Ozone Protocol”.
Ozone is basically insurance for use by Terra’s growing Decentralized Finance (or DeFi) sector.
The term DeFi refers to loan, savings, and trading protocols that suppress intermediaries, primarily banks and brokerages. Ozone helps manage risk.
Although Terraform Labs is headquartered in South Korea, its DeFi aspirations have created problems abroad. Kwon was notified by the US Securities and Exchange Commission (SEC) when he was going to speak at a crypto conference in September.
In October, he sued the agency on account of the subpoena, which is related to Terra’s Mirror Protocol. Mirror allows people to trade synthetic (crypto) versions of real-world stocks, including Tesla.
Terra’s burning strategy, while interesting, is not necessarily new.
Path taken by Ethereum
Ethereum succeeded in burning its own coins.
Fork (or “hard fork”) London implemented EIP-1559, a measure that redirects transaction fees, previously handed over to miners who validate transactions, to an inaccessible wallet, where ethers (ETH) are definitely destroyed.
Since the introduction of this deflationary measure, the price of ether has risen by more than 60%, reaching record highs along the way.
Without a doubt, Terra users expect to obtain similar incomes.
Price analysis 10/4: BTC, ETH, BNB, ADA, SOL, XRP, DOT, DOGE, LUNA, UNI
Bitcoin (BTC) is facing rejection near $50,000, indicating that bears are not ready to give up without a fight. Many analysts expect Bitcoin to soar in the last quarter of the year and stock-to-flow model creator PlanB says the “worst-case scenario” for Bitcoin in October is $63,000 and $98,000 by November.
PlanB is not alone in his bullish projection. Using Bitcoin’s relative strength index (RSI) indicator during the four-year cycle, Twitter commentator TechDev suggests that the second leg of the 2021 bull run may just be getting started. The trader expects Bitcoin’s cycle top to be around $200,000.
While historical projections may be pointing for a rally in the last quarter, the rise may not be linear. The US equity market’s volatility in October is 36% higher than the average for the remaining 11 months, according to CFRA chief investment strategist Sam Stovall. Due to Bitcoin’s high correlation with the S&P 500, traders may be in for a roller coaster ride in October.
Could Bitcoin follow its historical precedence and rally to the upside and will altcoins join in on the party? Let’s study the charts of the top-10 cryptocurrencies to find out.
Project Dawn initiative and upcoming mainnet upgrade back LUNA’s new ATH
In the last 24-hours, Terra (LUNA), a blockchain protocol focused on building a global payments system powered by the UST stablecoin, rallied to a new all-time high at $45.
Data from Cointelegraph Markets Pro and TradingView shows that since bottoming at a low of $5.61 on July 20, the price of LUNA has ripped 720% higher to a record high at $45 on Sept. 10.
The swift rally also lifted the total value locked (TVL) on the Terra protocol to a new all-time high at $7.83 billion on Sept. 5, making Terra the fourth-ranked blockchain platform by TVL according to Defi Llama.
A new funding initiative boosts LUNA price
A scroll through the project’s Twitter feed shows that the surge in price followed the announcement of ‘Project Dawn’, a new funding initiative for the Terra ecosystem meant to help improve critical infrastructure and accelerate the growth of the ecosystem.
1/ TFL is announcing Project Dawn, a new funding initiative for critical infrastructure improvements and core technologies to supplement the accelerating growth of the Terra ecosystem.
Details: https://t.co/Viv9VkAApT— Do Kwon 🌖 (@stablekwon) September 9, 2021
According to Terra co-founder Do Kwon, Project Dawn has allocated $150 million to “build a core Cosmos contributor organization, invest in the ecosystem’s node infrastructure, and diversify the validator and oracle infrastructure.”
Another source of excitement for the Terra community is the upcoming launch of its Colombus-5 mainnet upgrade on Sept. 29, which is “Terra’s most significant mainnet upgrade” according to the project.
1/ The Columbus-5 mainnet deployment will be delayed ~3 weeks until a new block height of 4,724,000, roughly equivalent to the following times:
9/29 at 20:30 PST
9/30 at 03:30 UTC
9/30 at 12:30 KST— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) September 1, 2021
On top of developments to the main protocol, LUNA price has also benefited from the expansion of the Terra ecosystem which has seen new DeFi protocols like AlphaDeFi launch and begin to attract liquidity.