While major cryptocurrencies are under bear control, the new version of collapsed Terra (LUNA), Terra Classic (LUNC) has been enjoying its bullish momentum for a month now. In the initial stage of its introduction, there has been a lot of controversy due to its 99% loss in a year.
At the time of writing, Terra Classic (LUNC) is trading at $0.000522 after an upward movement of 16.03% in the last 24hrs. As per Coingecko in just two weeks, LUNC has registered 400% profits.
However, with such a controversy around, there comes a question of sustainability and how long will the currency be profitable.
Reason For LUNC Price Rally
To understand any currency’s sustainability and value, it’s important to know the derivatives of that currency. In terms of LUNC, while the currency was having its time with a bullish trend, the derivatives around it were flashing negative. The derivative is the indicator that shows the number of traders who are taking longs or shorts.
If the funding rates flash bearish it means that majority of investors and traders are either shorting or betting for a price crunch. It’s vice versa when the funding rates are bullish. An anonymous trader has revealed that LUNC funding rates have hit -0.48% in the early hours today.
This means that as LUNC is experiencing a bull run, there is a short position that is crashing at the currency. Hence, the positions might get liquidated if the bullish trend is continued further.
Also when Open Interest (OI) is considered, there is an increase of OI towards LUNC/USDT over the last 12 hours. As per OI Bot, LUNC has gained 30% Open Interest along with an increase of millions of dollars.
There are many reasons spotted for LUNC’s increasing price action and one such reason is a proposal to introduce the currency burn concept for LUNC. The proposal got a green signal just a few weeks ago. Hence, there are speculations that this is the reason for LUNC’s price surge which burns 1.2% of the currency’s supply and in turn facilitates staking.
As per the proposal, the community known as Terra v1 governance community which also includes validators is the one that will decide the distribution for these two proposals.
However, it’s still not clear how far the burn mechanism will push LUNC towards upward price action or if it’s just a trap.
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