LUNA price rose 300% in September after the infamous collapse of its parental blockchain project Terra. What does it mean?
LUNA’s performance in September is striking since TerraUst – the stablecoin it backs – faced an incredible collapse this spring. The 300% monthly rise is particularly interesting after a long period of sideways consolidation.
Terraform Labs, the firm behind the Terra project, made it possible, dividing the old chain into Terra Classic (LUNC) and Terra LUNA 2.0 (LUNA/LUNA2). LUNA 2.0 was created as a part of a regeneration strategy after the collapse. Using the new token, Terraform Labs founder Do Kwon and his team periodically airdrop the LUNA2 tokens to users affected by the original Terra collapse.
The pumping of LUNA/LUNA2 started on September 9 – the exact date when Luna Classic (LUNC) passed governance proposals to add a 1.2% tax on all its on-chain transactions. The tax amount will be burnt, enabling LUNC to become deflationary, as the company claims.
However, the same day a strange transaction was noticed by a self-proclaimed Terra whistleblower, FatMan. They alleged a massive 435,000 LUNA2 tokens transfer to Binance was made by TerraForm Labs itself. Do Kwon dismissed the allegations, though.
Experts believe LUNA’s price risks will undergo a massive correction in the coming days, judging by its technical details like the token’s relative strength index (RSI) and a bearish reversal pattern.
Moreover, a rising wedge formed in LUNA’s trading pattern is now on its lower trendline for a potential breakdown move. Typically, in such cases, the price risks falling by as much as the wedge’s maximum height. Therefore, LUNA could drop to $4.5, down 30% from the price on Sept. 11.