Terra Could Become Very Bullish After Starting LUNA Burning, Here’s Why
Terra (LUNA) has been on an uptrend the past week after a period of consolidation as the network has begun burning the supply of its native token LUNA. At the time of writing, LUNA trades at $50.32 with 4.6% gains in the daily chart.
Bitcoin and major cryptocurrencies dropped from new-all times highs yesterday. Before the correction LUNA started a breakout to the upside and seemed ready to break out from the resistance at $54.
The potential rally got interrupted by the flash crash and LUNA was rejected near the mid area around its current levels.
What’s Driving Terra’s Bullish Momentum?
The implementation of three major upgrades on the Terra mainnet seems to be the driver for the rally. Terra was ready some weeks ago already to introduce the Colombus-5 and Wormhole v2 with the Inter-Blockchain Communication (IBC) protocol upgrade.
The first of these three improvements COL-5 was set to implement a deflationary mechanism for LUNA. In addition, the upgrade was designed to increase Terra’s interoperable capabilities.
History has shown that tokens with a burning supply system have seen great appreciation. For example, Binance Coin (BNB) rose from the low $50 and reached an all-time high above $600.
Ethereum and its recently integrated EIP-1559 is another show case. The network changed its fee model to burn a portion of ETH with each transaction.
LUNA could follow a similar path with $80 as a potential reasonable target for LUNA in the short term but could record further gains above $100 and join Solana (SOL) as one of the top performers in 2021.
Some believe that Terra (LUNA) and its ecosystem due to its potential to disrupt the stablecoin sector, is a very bullish trade. Upon launch of the burning mechanism, Investor Daniel Cheung said:
“Thesis for $LUNA is playing out; $140 price target in the short term still holds. Long term, Terra is one of the few protocols with the potential to be in the trillion-dollar market cap range given TAM for stable coins is infinite.”
As Bitcoin moves sideways after the correction, the altcoin market are in a position to launch rallies. For LUNA this could translate into price discovery.
As a first step, LUNA should reclaim $54 and clear the resistance at $56 with a potential short-term price target at $60.
Explain to me how this does not look like we are about to go parabolic into the top 5.
Great fundamental story, great chart, god status founder.
