The cryptocurrency market managed to recover after a heavy crash that occurred earlier this week. Many altcoins managed to slightly recover and bounced back from their respective support prices. Terra LUNA was among those altcoins that had a great comeback as its prices soared by more than 15%. Looking at the previous 7 days, most cryptos are in the red except for LUNA, which is currently up by more than 35%. Is LUNA proving to be a good crypto to own and hedge the crypto down market? Should you buy LUNA and add it to your crypto portfolio? Let’s analyze Terra’s token in this LUNA price prediction.
What is LUNA Crypto?
Terra is a blockchain protocol that used stablecoins to enable price stability in global payment networks. In fact, they claim to combine price stability and fiat currencies by enabling Bitcoin (BTC), thus offering cheap settlements. Volatility was a highly discussed topic in the cryptocurrency realm. It is one of the main reasons that made investors fear owning cryptos. Terra seeks to change that, by using fiat-pegged stablecoins. They would keep a “one stablecoin to one fiat” peg through a proprietary algorithm that automatically adjusts stablecoin supply based on its demand. This is feasible thanks to their token LUNA, which provides liquidity, price stability, and is easily swappable to other stablecoin at profitable exchange rates.
How does Terra LUNA work?
Terra currently has four tradeable tokens on its blockchain. LUNA gives staking rights and is used in the protocol’s stability mechanism. Those four stablecoins are as follows:
- TerraUSD (UST): pegged to the USD Dollar
- TerraKRW (KRT): pegged to the South Korean Won
- TerraMNT (MNT): pegged to the Mongolian Tugrik
- TerraSDR (SDT): pegged to the International Monetary Fund’s SDR unit of account (Special Drawing Right, which is a basket of Foreign Exchange currencies held by the IMF)
The presence of SDR in the stablecoins offering is a solid must-have, as it represents a very stable currency. Therefore, they plan to add many other currencies in the future such as Euro, Yuan, and Yen pegged tokens. Terra stakers have the ability to vote and recommend new Terra currencies and disapprove existing Terra currencies. With the introduction of new currencies and a cross-border expansion, Terra presents a very interesting opportunity with a solid whitepaper.
LUNA up by more than 15% – What Happened?
When the crypto market started to recover, many altcoins shot as high as 10% in prices. LUNA specifically managed to explode by more than 15%. In figure 1, we can clearly see how LUNA price jumped from its strong support area of around $50 all the way towards the current price of $69.
This strong support was proven to be a significant one. We can notice how many times prices tested this area in figure 1 as a resistance first, which later turned to a support. That’s why technical traders anticipated this upward move.
LUNA Price Prediction – What will happen to LUNA next?
Since LUNA price reached the strong support of $50, prices were expected to reach the psychological price of $60. As part of the crypto comeback, LUNA prices continued higher towards the next resistance of $70. Below, we clearly highlight the important price areas of LUNA that all represent psychological prices:
The next move of LUNA might be a slight price adjustment. It is advisable to wait for the price to decrease towards $60, then place a trade set up accordingly:
- If the crypto market continues higher, a buy order can be placed $70
- If the crypto market crashes lower, a short-sell can be placed towards $50
It is important to always remember to place an adequate stop-loss depending on your risk appetite.
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* This article was originally published here