Terra’s LUNA One of The Biggest Gainers Among Cryptos: What’s Happening?
Terra’s LUNA is one of the biggest gainers in the crypto market as investor mood turns upbeat following Bitcoin’s attempts at rebounding higher and the high levels of activity in the DeFi space supporting the need for the TerraUSD (UST) stablecoin. At the time of writing, LUNA/USD is trading at around $81.17.
Following a brief drop under the $40,000 mark, market leader Bitcoin is on the way back up again, helping bring back a bit of a positive sentiment in the wider crypto sector and helping buying activity rise. With the market sentiment receiving a boost, several of the leading cryptocurrencies across the board have also been helped higher, supporting the strong bullish moves being seen in LUNA.
LUNA Supported by Rising Demand for Terra USD (UST)
Terra’s governance token has also been enjoying support from a steady uptick in activity across the DeFi market which has kept up the demand for the blockchain’s stablecoin UST. Terra employs an algorithmic price stability mechanism to maintain UST’s peg to the US dollar by burning more LUNA tokens when the demand for UST rises. The UST has become one of the most popular stablecoins in use across several leading DeFi protocols and whenever users need more of this coin, keeping the burn rate of LUNA higher and creating a deflationary move to drive its price higher.
The UST also saw higher demand earlier this week when Fed Chair Jerome Powell sounded more accepting about stablecoins. After criticizing these digital assets in the past, especially Tether on account of its questionable backing, Powell’s latest comments were well received by DeFi investors who accumulated more stablecoins, further increasing the burn rate of Terra’s LUNA.
Terra Proposes to Enhance Interchain Deployment of LUNA And UST
In more promising news, Terra’s recent proposal to commit more than $139 million to enhance the interchain deployment of its LUNA and UST coins across five DeFi projects on Ethereum, Polygon and Solana has also raised investor confidence in the network and kept it well bid lately. In its report, the developers talk about bringing “awesome UST use-cases” on the following projects – Olympus DAO, Rari Fuse, InvictusDAO, Convex and Tokemak.
The move would see Terra deposit anywhere between $250k and $50 million worth of UST to make these partner projects more stable. If the governance proposal receives enough votes by the blockchain’s community, one of the biggest beneficiaries would be Tokemak, which would receive $50 million in UST for a minimum of six months. Meanwhile, Rari Fuse could receive $20 million and Convex could receive a deposit of $18 million in UST.
Another interesting development driving bullishness in the LUNA token is cryptocurrency issuer 21Shares launching the world’s first Terra ETP. The product has been listed on the SIX Swiss Exchange and will give institutional investors exposure to this promising DeFi token.
LUNA/USD Technical Analysis
Technical analysis of the 4-hour price chart of LUNA/USD reveals a strong bullish bias among most of the moving averages as well as leading technical indicators MACD and momentum. This looks like a good time to jump in with a buying opportunity.
Terra’s LUNA is trading above the pivot point at $76.99 although there is still some distance to go until the immediate resistance at $91.47. Let’s see if buying momentum can sustain to test this level in the near term.
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