LUNC, USTC gain traction – Can this be the beginning of Terra’s revival?

• USTC and LUNC both registered double-digit growth over the last few days.
• LUNC’s market indicator, however, suggested that the token might witness a price correction.

Terra Classic [LUNA] and TerraUSD [USTC]  have taken a massive blow over the last few years since the stablecoin’s depegging. In fact, the episode initiated a disastrous bear market, the effects of which are still visible.

However, Binance, which is the largest crypto exchange in the world, recently made an announcement that somewhat gave hope for a trend reversal. Here’s a closer look at the Terra ecosystem to better understand what investors should expect from LUNC over the months to follow.

Why is Terra suffering?

To give a perspective, TerraUSD depreciated from its $1 value in May 2022, which caused an outburst across the entire crypto market. Not only did Terra ecosystem tokens fall, but top coins like Bitcoin and Ethereum also took a blow.

Since then, the entire Terra ecosystem has been struggling, including LUNC. But things might look different for Terra in the coming months as Binance has made a major announcement.

Binance Futures launched the USD-M USTC Perpetual Contract on 27th November 2023 with up to 50x leverage. The maximum funding rate of the USTCUSDT Perpetual Contract at the time of launch was +2.00% or -2.00%.

Thanks to that, moist Terra ecosystem tokens such as USTC and LUNC gained bullish momentum. To be precise, both tokens were trending on CoinMarketCap at the time of writing this article. 

Source: CoinMarketCap

Here is how Terra Classic and TerraUSD are doing

According to CoinMarketCap, USTC was up by more than 36% in just the last 24 hours. At press time, it was valued at $0.05032 with a market cap of over $451 million.

Thanks to the spike in positive sentiment around the coin, general investors’ confidence was also high. This was evident from the rise in its total number of holders.

However, AMBCrypto’s analysis revealed that the whales did not have much faith in USTC as its supply held by top addresses dropped in the recent past.

Source: Santiment

Like USTC, Terra Classic also initiated a promising bull rally. As reported earlier by AMBCrypto, LUNC displayed a laudable performance in the recent past as its price rallied by double digits.

To be specific, LUNC was up by more than 23% in just the last 24 hours. At the time of writing, it was trading at $0.0001194 with a market cap of over $394 million, making it the 71st largest crypto.

The token’s burn rate has also been relatively high over the last week, as it burned a substantial number of tokens.

As per the latest tweet from LunaClassic HQ, nearly 29 billion LUNCs have been burned, which accounted for nearly 37% of its supply.

$LUNC Keep burning 🔥 🔥🔥🔥

Heading to 80B Soon. pic.twitter.com/ojgK3IgqJ8

— LunaClassic HQ 🌕 ™ (@LunaClassicHQ) November 28, 2023

AMBCrypto then had a look at LUNC’s derivatives metrics to see what they suggested. As per our analysis, Terra Classic’s open interest shot up along with its price.

Whenever open interest rises, it increases the chances of the current price trend continuing. Therefore, it seems likely that LUNC will continue its bull rally over the coming days.

Source: Coinglass

Going forward

As the open interest growth looked ambitious, AMBCrypto then checked LUNC’s daily chart to see whether the token would sustain its uptrend over the weeks to follow. At first glance, the MACD displayed a clear bullish upper hand in the market.

Realistic or not, here’s LUNC market cap in BTC‘s terms  

However, the rest of the metrics had a different story to tell. LUNC’s price touched the upper limit of the Bollinger Bands, which caused a trend reversal and pushed LUNC’s price down. The Money Flow Index (MFI) entered an overbought position.

Furthermore, the Relative Strength Index (RSI) also enters a similar zone. This can initiate selling pressure on Terra Classic, which can be concerning for its ongoing bull rally.

Source: TradingView