- Summary:
- Terra Luna is up by 12 per cent in today's tradings session. The cryptocurrency opened the month trading at $78.1.
Terra Luna is up by 12 per cent in today’s tradings session. The cryptocurrency opened the month, trading at $78.1. However, events from last week saw the coin drop by 99.99 per cent. Currently, Terra Luna is trading at $0.00024.
However, today’s Terra Luna gain should not be interpreted as a resurgence of the cryptocurrency. In my last week’s analysis, I highlighted multiple steps that needed to happen in order for Luna to start recovery. Among these reasons were decoupling from the UST stable coin, or if that was not possible, bringing the stable coin back to a 1:1 ratio with USD. In addition, other factors such as investors’ confidence in the future of the project and the ability of the Terra Luna leadership to steer it in a positive direction were also discussed.
Fast forward to today, the problems plaguing Luna are yet to be addressed. At the time of writing this article, the UST is still in a steady decline. It is also over 80 cents below the dollar peg. Being an algorithmic stablecoin attached to Terra Luna, each time UST is losing price, more Luna is being printed. The result is a saturation of Luna.
Currently, the total circulating supply of Luna is over 6.5 trillion. The circulating supply is almost about to hit the maximum supply of $6.9 trillion. Such a large number of circulating coins mean that the crypto is unlikely to recover due to two main reasons.
The first major reason is the current total market capitalisation of the cryptocurrency industry stands at $1.27. Therefore, recovery to a dollar would mean Luna would need to have a higher market capitalisation than the rest of the cryptocurrencies. However, considering it was trading above $75 at the beginning of the month, I no longer expect it to hit the dollar mark.
The second reason is that compared with bitcoin, which has a market capitalisation of $560 billion, trading at $0.1 would mean Luna would become the largest crypto by market capitalisation.
Therefore, my Terra Luna price prediction is it will likely not go past the $0.0005 in the next few trading sessions. There is also a high likelihood that the current drop may continue. The chart below shows how the prices have bottomed in the past few days.
Terra Luna Daily Chart
