What’s up crypto fiends! Terra (LUNA) is moving like hotcakes to the upside, but with a major swing high level ahead, will the bulls look to take profits again?
LUNA/USD 4-Hour
Terra (LUNA) was an outlier this past weekend as the bulls took charge without regard for the broader crypto weakness due to the broad risk-off sentiment reaction to Omnicron news.
LUNA/USD easily broke out of the $45 – $50 range (and held the rising channel pattern), and with momentum still hot, the previous all-time high just under $55 seems like a good bet of retesting sometime this week. The question then will be, “will traders take profits around $55 again or will the monster rally keep on keepin’ on?”
Right now, the fundamental story is highly favoring a supply shock coming for LUNA as 38% of LUNA is staked and around $1M worth of LUNA is being burned per day to mint Terra’s main product, UST, an algorithmic stablecoin pegged to the U.S. dollar. With a target goal of mint another $2.5B worth of UST, we could see another 10% of LUNA’s circulating supply of just under 400M tokens being burned before the end of the year. Let’s also not forget that staking rewards are on the upswing, currently +10.70% and rising, likely to draw in more holders to stake and lock up more supply.
So, would $55 draw hold once again if retested? Right now, the odds seems low of a big reversal from there as the fundamental narrative is likely to keep pulling in buyers, but it is likely we’ll see some profit taking in a somewhat sketchy macro environment (rising covid-19 and high inflation concerns). We expect some choppiness in the short-term if we do see $55 again.
On the other hand, if the broad market does bring on a dip in LUNA/USD and there is no major negative catalyst, the Terra ecosystem’s fundamentals make the area between $40 – $45 one to watch as it would likely draw in both fundie and technical buyers looking to play the longer-term trend higher.
What do you all think? Is LUNA set to take out $55 and go to the moon? Or will that be the short-term top once again.
