LUNA2 Terra soars by 70% in nine days, despite the constant risks of a sell-off
Price of Terra (LUNA2) It recovered sharply nine days after falling to a historic low of $1.62.
On June 27, the LUNA2 rate reached $2.77 per token, thereby demonstrating a 70% recovery when measured from the specified minimum. However, the token was trading 77.35% below its all-time high of $12.24 set on May 30. The recovery of LUNA2 reflected similar correction movements in other parts of the crypto industry, with the best crypto assets Bitcoin (BTC) and Ether (ETH) rising by about 25% and 45% over the same period.
The recent bout of buying in the LUNA2 market may catch the bulls, given that it has become part of a broader correction trend. In detail, LUNA2 seems to be forming a "bear flag" model, a bearish continuation setup that appears as the price consolidates upwards inside a parallel ascending channel after a large descent.
Bearish flags are resolved after the price breaks below the lower trend line of the channel. As a rule, their breakout leads the price to a level equal to the size of the previous downward move (called the "flagpole"), as shown in the chart below.
LUNA2, which is currently trading near the upper trend line of its Bearish Flag (~$2.40), may undergo an inevitable retreat to the lower trend line of the pattern around $2. If this is accompanied by an increase in volume, an extended price correction will put LUNA2 at risk of falling to $1.30, which is almost 50% less than the price on June 2.
LUNA's depressing technical outlook also takes cues from her controversial history. It is noteworthy that LUNA2 appeared at the end of May as a means of compensating investors who suffered losses during the collapse of the Terra algorithmic stablecoin, now called TerraClassic USD (USTC). Meanwhile, an almost useless old version of LUNA2 called LUNA has started trading as an independent token under an updated brand called "Terra Classic (LUNAC)".
LUNA2 opened on major exchanges with a 483% jump to $12.24, only to later give up all profits in a massive adjustment amount. Mati Greenspan, founder of crypto researcher Quantum Economics, noted that no one in their right mind would want to invest in LUNA2 after the collapse of LUNAC.
This leaves LUNA2 in the hands of hardcore holders who want to fully recoup their Terra losses, and speculators who want to bet with excessive leverage on everyday volatile price movements. Interestingly, such assumptions also lead to an increase in the market capitalization of LUNAC and USTC.
LUNAC's market capitalization, despite being theoretically dead, rose 75% to $594 million on June 27, reaching just $339 million on June 12. Similarly, USTC's market valuation rallied from $13 million to $96 million over the same period.
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