- Binance Futures launches USTC Perpetual Contract with leverage, suggesting a possible bullish reversal in the Terra ecosystem after recent challenges.
- Despite the increase in open interest and LUNC rally, metrics such as MFI and RSI raise concerns, suggesting possible near-term challenges.
The Terra ecosystem, represented by Terra Classic (LUNA) and TerraUSD (USTC), has taken a significant hit in recent years since the stablecoin delinking. This episode triggered a disastrous bear market, the effects of which are still lingering. Recently, however, Binance, the world’s largest cryptocurrency exchange platform, has announced news that could suggest a possible trend reversal.
Let’s take a closer look at what we can expect from LUNC in the coming months.
why is Terra suffering?
For context, TerraUSD devalued from its $1 value in May 2022, triggering a chain reaction across the cryptocurrency market. Not only did Terra ecosystem tokens fall, but major cryptocurrencies such as Bitcoin and Ethereum also suffered.
Since then, the Terra ecosystem, including LUNC, has faced difficulties. However, Binance has announced a new development that could change the landscape.
Binance Futures and the USTC Perpetual Contract
On November 27, 2023, Binance Futures launched the USD-M USTC Perpetual Contract with up to 50x leverage. The contract had a maximum funding rate of 2.00% or -2.00% at launch.
Terra Classic and TerraUSD Current Performance
According to CoinMarketCap, USTC has seen an increase of over 36% in the last 24 hours, valuing it at $0.05032 with a market cap of over $451 million.
Source: Santiment
The positive sentiment around the currency has boosted investor confidence, reflected in the increase in its total number of holders. However, an analysis revealed that whales did not have much confidence in USTC, as the number held by senior management declined recently.
As for Terra Classic, it has also started a promising bull rally, up 23% in the last 24 hours. At the time of writing this analysis, it is trading at $0.0001194, with a market cap of over $394 million, ranking 71st among the largest cryptocurrencies.
LUNC’s token burn rate has been high in the past week, with nearly 29 billion LUNC burned, representing nearly 37% of its supply.
Derivatives and Future Metrics
Analysis of LUNC derivatives metrics shows an increase in open interest along with its price. The growth in open interest increases the likelihood that the current price trend will continue, suggesting that LUNC could maintain its bullish rally in the coming days.
Source: Coinglass
Future Outlook
Although the open interest growth looks promising, the daily chart of LUNC was examined to determine whether the token will maintain its uptrend in the coming weeks. At first glance, the MACD clearly shows a bullish edge in the market.
However, other metrics tell a different story. The price of LUNC touched the upper boundary of the Bollinger Bands, which caused a trend reversal and a decline in price. The Money Flow Index (MFI) entered an overbought position. In addition, the Relative Strength Index (RSI) also entered a similar zone, which could initiate selling pressure on Terra Classic, raising concerns for its current bullish rally.
While the Binance news has injected some hope into the Terra ecosystem, it is crucial that investors closely monitor technical and fundamental metrics to make informed decisions in this period of apparent resurgence.
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