Terra LUNA hits new all-time high after 100% rebound from 2022 lows
Terra (LUNA) hit its highest level yet on March 29, when the Luna Foundation Guard’s (LFG) plans to boost its Bitcoin (BTC) reserves eased anxiety over the impact of a Reserve federal increasingly aggressive and ongoing war between Ukraine and Russia over the cryptocurrency markets. LUNA’s price hit a new high above $106 LUNA’s price broke the previous high of $106.29 by tiny margins, reversing the losses incurred during the sell-off between December 2021 and January 2022.
The latest price rally pushed Terra token’s net capitalization to cross $37.17 billion, now making up 1.76% of the entire crypto market, compared to 0.39% at the beginning of this year.
Terra does a MicroStrategy
Bitcoin wallets associated with LFG, a nonprofit spearheaded by Terra’s creator Do Kwon, saw an inflow of 2,830 BTC worth $135 million on Monday. The influx occurred as a part of LFG’s Bitcoin accumulation spree following a community proposal that suggested using BTC as collateral to “provide deep liquidity at a discount when the UST peg is under pressure.”
UST is Terra’s decentralized stable coin otherwise collateralized by the blockchain’s native cryptocurrency LUNA. As such, Terra’s economy supports the burning of LUNA tokens to mint more UST units as a strategy to maintain the latter’s dollar-peg.
LFG has outlined plans to boost its Bitcoin reserves to $3 billion with a long-term strategy to swell the pool to $10 billion. In a theory, that could lead to an increase in demand for UST, thereby forcing more LUNA tokens out of active supply permanently.
We're seeing some of the earliest and most ambitious ideas in crypto starting to unfold
Crosschain decentralized stablecoin backed entirely by digitally native assets was the holy grail in 2016
— Zhu Su 🔺🌕 (@zhusu) March 29, 2022
LUNA faces immediate selloff risks
From a technical perspective, LUNA faces the prospects of undergoing a 50% price correction in the coming weeks, though this may not necessarily hurt the bullish long-term outlook.
In detail, the Terra token has been consolidating inside what appears to be an ascending channel, a continuation pattern that appears after the price fluctuates inside a range defined by an upper horizontal and a lower rising trendline.
In a perfect scenario, the pattern is resolved with a breakout in the direction of the previous trend of the asset, increasing the maximum distance between the upper and lower trendline of the channel. As a result, the price of LUNA could shoot up to $425 in 2022, as shown in the chart below. But the bullish outlook has yet to be confirmed, starting with a decisive break above the upper trendline of the triangle.
Otherwise, LUNA’s outlook for a strong pullback to the lower trendlines looks higher, meaning price drops towards the $50-$60 range, down about 50% from today’s price. today. The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com Every investment and trading move involves risk, you should conduct your own research when making a decision.