Can LUNC regain its strength with the increasing Terra Classic burn and staking?
The price of Terra Luna Classic (LUNC) has faced downward pressure this week, in line with the performance of Bitcoin and other altcoins.
Terra Luna Classic (LUNC) has dropped to a key support level of $0.00010, reaching its lowest point since December 20th of last year. It has decreased by 42% from its high in December.
One potential factor affecting the LUNC price is the ongoing token burns, which have accelerated over the past few months. Data from LUNC Metrics shows that the network has burned over 397 billion tokens since May 2022.
In the past seven days alone, 341 million tokens have been burned, and the number continues to grow. On January 10th, the daily burn reached over 686 million. Binance remains the largest LUNC burner, having burned almost 70 billion tokens. Meanwhile, DFLUNC Protocol and LunaticsToken have burned over 2 billion and 1.9 billion LUNC tokens, respectively.
These token burns have helped reduce LUNC’s circulating supply over the past two years to 6.50 trillion. In theory, token burns increase a cryptocurrency’s price by reducing supply and increasing the value of the remaining tokens.
Additionally, data shows that investors have increased their staked tokens in the past few days. The staking ratio has risen to 15%, or 981 billion LUNC tokens, up from last week’s low of 14.8%.
A higher staking ratio is a positive sign for a cryptocurrency, as it reduces the number of tokens available for sale on the market, easing selling pressure. These positive metrics may support a recovery in LUNC’s price once the ongoing sell-off ends.
LUNC price analysis
The daily chart indicates that LUNC price reached a peak of $0.0001790 in December before retracing some of those gains to the current level of $0.00010. This retreat has occurred amidst overall weakness in the broader crypto market.
Most recently, the token broke below the key support level at $0.0001054, which was the neckline of a small double-top chart pattern. Additionally, LUNC has fallen below both the 50-day and 200-day moving averages.
On a positive note, the coin has formed a cup and handle pattern, a popular bullish continuation indicator. The ongoing pullback is likely part of the handle formation. Therefore, there is a possibility that Terra Luna Classic’s price will rebound as long as it remains above the key support level at $0.00009060.
If this recovery occurs, the initial target to watch will be the double-top level at $0.000122, followed by the upper side of the cup at $0.0001310 and last December’s high of $0.000179. A return to last month’s high would represent a 73% increase from the current price.
