The LUNA price burst higher, almost doubling in 4-days as cryptocurrency titan Milke Novogratz stated Terra and Solana are superior to Cardano. Stable-coin protocol Terra was already marching higher before the Galaxy Investments Partners CEO’s latest endorsement. However, the real gains followed the Tweet, which drew a response from Cardano founder Charles Hodgkinson.
Terra (LUNA) has been a star performer amongst the top-rated cryptos over the last week. And whilst Bitcoin and Ethereum have experienced a period of consolidation, the LUNA price has gone parabolic. As a result, Terra has now added more than $10 billion to its market cap since the middle of July. The latest data values the protocol at over $12 billion, ranking it the 12th-largest cryptocurrency.
Novogratz has long been a fan of the protocol that uses the LUNA coin to stabilise transactions pegged against several currencies, including the US Dollar and the IMF’s Special Drawing Rights basket (SDR’s). But it’s his latest mention that has super-charged the rally.
And as much as this was good for Solana (SOL) and the LUNA price, it put the brakes on Cardano’s impressive run, sending ADA from $2.2500 back below $2.00 before recovering to $2.0900 this morning. But after such an explosive move in a short time, investors must be wondering if LUNA may have done too much, too soon.
The rally is looking stretched on almost every time frame. The Relative Strength Index (RSI) is reading 91.10 and deep into overbought territory on the daily chart. However, on the 2-hour chart below, the indicator has cooled off below the 70 reading, which indicates an overbought asset.
But, this is crypto, and parabolic moves can often extend for longer than is rational. Although, that doesn’t mean they don’t come to an end. And when they do, the result is often brutal.
Bearing in mind, Terra was trading at $5.80 in August, the current price of $31.80 is incredible. Not to mention that just four days ago, the LUNA price was at $16.50. And even a 50% retracement of the move in the last four days would result in Terra losing 25%. This makes buying LUNA here fraught with risk.
On that basis, only investors with the highest risk appetite should chase the rally. That’s not to say that Terra won’t go higher. It’s merely a warning that what goes up often comes down, at least some of the way, and often very quickly.
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