Terra Luna Making an Impressive Comeback! Is it Time to Invest?

The price of Terra Luna skyrocketed to almost US$7 from less than US$2!

The twin collapses of Terra's UST stablecoin and Terra LUNA fueled the market-wide crumble in May, a plunge that the investors are still recovering from. However, after this turmoil, Do Kwon and his team's recovery efforts rebooted LUNA. Also, its counterpart Terra LUNA Classic, alongside LUNA, has skyrocketed in the last few days.

The native token of Terra's blockchain registered an over 200% ROI over the last two days. Even so, the coin was still down by 67.5% from its ATH, at the time of writing. It's a surprising surge for a coin that has barely budged since early June, sticking close to the US$2 mark. The price popped as high as US$6.87 over the last day, marking a peak 247% increase since the start of the day.

While it shares the name of the cryptocurrency that lost nearly 100% of its value in May, LUNA is actually a new coin created by Terra founder Do Kwon to support the rebooted Terra blockchain. The newly rebooted LUNA blockchain was forked from the code of the previous one and is Kwon's attempt to try and revitalize the fallen crypto ecosystem.

Crypto Rally for Luna

Crypto market experts said that the rally is probably being supported by a "tax burn" regime intended to limit the token's excessively inflated supply.

"Luna continues to be a risky trade at this time. The basics of the coin won't be dramatically altered by the new burn strategy. Such transactions are to be avoided, and one should only engage them if they have a suitable exit plan for both gain and downside," says Dileep Seinberg, Founder & CEO, MuffinPay, Bill Payment & Utility Crypto.

Rajagopal Menon, Vice President, WazirX, a crypto exchange, explained that the community has proposed a burn of 1.2 percent on all transactions on all activities on the old Terra luna blockchain. "This burn will continue till the supply of LUNC reaches 10 billion. Currently, the total supply is at about 6.5 trillion. Some major exchanges, including Binance, the world's largest crypto exchange, agreed to the proposal, which requires a 1.2 percent tax burn for on-chain transactions like deposits and withdrawals," he said.

Luna Price Study

Since its all-time low on 29 August, LUNA regained its lost momentum to retest the US$1.7-level. The break above this level flipped it from resistance to support while the bulls aimed to snap the US$2.1 hurdle.

After testing this hurdle twice, the third test resulted in a breakout rally that put LUNA in price discovery. The altcoin witnessed a solid bullish engulfing candlestick on 9 September, one that aided the bulls in fixating a spot beyond the north-looking 20/50/200 EMA.

With bulls breaking the low volatility phase, the sellers could pose near-term bottlenecks near the upper trendline of the up-channel. A close above the US$6.5-level would position LUNA for a test of the US$7-US$10 range before a likely reversal.

Why the Rebooted LUNA is Up So Big Today?

It could be an aftershock from LUNC's momentum, effectively piggybacking on it while catapulting to even greater percentage gains in the process. Terra also recently launched a claim process for LUNA Classic holders who didn't receive the new token when the network relaunched, with 19.5 million LUNA available.

However, Luna remains a volatile trade. The new burn scheme will not significantly change the coin's fundamentals. If you fear losing then you should avoid such trades and enter only if they have a proper exit strategy during both upside and downside.