Just a couple of days following its launch, the Terra network’s new LUNA (or LUNA2) token continues to show high volatility levels. This cryptocurrency was created in response to the collapse of the old LUNA (or LUNA Classic) which saw its value drop almost 99% within a matter of days.
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Retail investors suffered huge losses as Anchor Protocol (the platform that promised stablecoin UST holders a 20% annual percentage rate of return (APR)), was shut down. The Terra ecosystem also enjoyed high popularity.
LUNA2 currently trades at $6.65, with a 7% loss on the 4-hour chart. Although the cryptocurrency reached as high as $10 on its peak, it could still experiment with downtrend volatility.
Material Indicators (MI), data suggested further losses once the price reached an all-time high. Based on Trend Precognition indicators for daily charts, LUNA2 might re-test support levels.
A potential decline in the cryptocurrency market could hinder any recovery. The largest cryptocurrencies, such as Bitcoin and Ethereum were recording gains during today’s trading session after weeks of sideways movement.
Bitcoin reached almost 9 percent, however all profits were lost within shorter periods. If bulls cannot resist increasing selling pressure, then the top crypto market cap may return to around $28,000 to $30,000.
Ali Martinez, an analyst identified $28,600 and $29 800 as next areas of potential support. These areas could provide relief for LUNA2 traders, but there might be further downside in the near term.
#BitcoinAs expected, the 200MA rejected the chart at 4:44.
Now, $BTCTests the $30,750 support level. Failure to maintain it above the level could result in a warning. #BTCThe next area of assistance is at $28,660 and $29,800.
The 200MA is the limit for prices above $34,750. https://t.co/Kb49f4Krn1 pic.twitter.com/YHwfKvhX4o
— Ali Martinez (@ali_charts) June 1, 2022
LUNA2 was created to allow LUNA holders the right to receive an airdrop. This was done to reduce their losses, and give them a concrete solution. Some critics think the initiative is insufficient. This could lead to a downward price action, as token users get and then dump their tokens onto the market.
Users express concern about exchanges supporting LUNA2
There were many questions about the future prospects of any new LUNA token before its launch. Crypto exchange platforms rushed for the removal of the original cryptocurrency and ended any trades with LUNA when it fell below $0.
These same platforms are now supporting LUNA2. Many users have been calling out these venues as they consider the token could follow LUNA’s trajectory into oblivion.
Jesse Powell is the CEO of cryptocurrency exchange Kraken. The following was his response to the LUNA2 & LUNA concerns:
I don’t necessarily see them as related. What technical explanation is there for LUNA2’s behavior? Is LUNA2 also susceptible to the same problems? I’m not an expert on the coin but presumably LUNA2 has learned something from LUNA. Does the support of LUNA2 or the airdrop improve the situation for LUNA owners?
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In addition, Powell claimed the LUNA crash might have been the cause of “incompetence” rather than a “scam”, as many critics believe. In that sense, he claims listing a cryptocurrency is different from endorsing it and added: “All assets have risk”.