LUNA is a Blockchain used to launch algorithmic, stable coins. It is among the best DeFi platforms for total value in circulation.
LUNA trended higher in recent days. However, it has gained momentum even more over the preceding 48 hours. By closing 40% greater, LUNA was among this past week’s biggest gainers.
You may also like these related readings| Bitcoin Surges to $40,000 Following Breaking Key Resistance
It is good news! Luna Foundation GuardThe positive reaction of the markets after (LFG), created a Bitcoin denominated reserve, has prompted them to respond positively. It will provide additional stability and security to Terra USD. Terra USD is experiencing sharp price fluctuations due to low liquidity on the exchanges.
LFG announced it would invest $1 billion to increase its Bitcoin reserve. This news is the best! All of LFs’ coins are locked for 4-years, which means they won’t be able to trade until after those periods. This boosts investor confidence on multiple platforms such as LUNA and drives up demand. The reason investors seek out safe-haven assets in these uncertain times is because they are looking for them.
Analysts and experts are raving about the recent US Treasury move to establish a Bitcoin reserve. This new move should reduce UST’s price volatility.
The Mechanism
Stablecoin UST can be linked to the US dollar using an algorithm. Unlike other centralized cryptocurrencies, it isn’t backed by anything but Luuna (the company behind them). If token prices are lower than $1 per token and they fall below their price point, UST can easily be traded for LUNA. Investors can sell them for $1. The opposite happens when demand increases; burning more luna means higher prices because there’ll be less overall supply coming into circulation.
Terra’s introduction of a Bitcoin reserve could be seen as the next important step in reducing volatility within its ecosystem. It reduces the correlation of bitcoin and UST. It means traders will be able to exchange their bitcoins for other assets.
Does LUNA really make sense?
LUNA’s price has been on an upward trend recently, and it was trading at $74.34 on February 26th, 2022. Within 24 hours, the price of the coin rose 13%.
You may also like these related readings| The Possibility of Russia-Ukraine talks causes cryptocurrency prices to soar
Currently, LUNA is trading below the weekly support of $77.17 with a strong upward trend since February 24, 2017. So keep an eye on this one – it might be time to buy more shares before they climb higher in future updates.
If you’re looking to invest in crypto, buying volumes increase, and Luuna is a good bet. Altcoin is able to overcome resistance with ease. It could even test prices higher than $90 by February’s end.
The cryptocurrency is in a strong uptrend at the moment, so it’s not too late for it to become bearish. Investors should watch out for a drop below $65 to indicate a possible downtrend.
Featured Image from Flickr. Chart by TradingView.com