Terra Luna Classic: Understanding the 90% Surge in LUNC Prices

In just 24 hours, the price of Terra Luna Classic (LUNC) surged over 90%, marking its second consecutive day of gains. This impressive rally propelled LUNC to become the second most popular token on CoinMarketCap. The recent increase can be attributed to the renewed focus on founder Do Kwon’s forthcoming court decision scheduled for December 11th.

Key Takeaways

Significant Price Increase: LUNC’s price climbed over 90% in 24 hours.
Do Kwon's Court Case: The upcoming decision regarding founder Do Kwon is attracting market attention.
Short Liquidations: A massive liquidation of short positions contributed to the price surge.
Token Burns: A substantial amount of tokens was burned, decreasing supply and positively impacting prices.
Market Outlook: Technical indicators suggest potential for continued gains, but market dynamics remain uncertain.

LUNC up 90% as Do Kwon's decision nears: What’s next?

Despite Do Kwon pleading guilty to fraud related to the collapse of LUNC—news that typically would dampen market sentiment—the price has surprisingly shot up, leaving investors puzzled about the factors driving this unexpected rise.

Short Liquidation: A Key Driver of the Rally

The surge in LUNC's price was not solely due to heightened interest in Do Kwon's situation; it was also significantly influenced by the liquidation of short positions. Currently, the LUNC trading pair is witnessing the largest short liquidations, surpassing even Ethereum (ETH) and Bitcoin (BTC).

According to data from CoinGlass, LUNC has seen over $1.47 million in short liquidations in just one hour and $5.19 million within 12 hours. This accounted for approximately 10% of all liquidated short positions.

LUNC Trading Activity

The alternative token, LUNA, created by Do Kwon after LUNC, did not see the same level of trading activity but did manage to draw some liquidity away from LUNC, indicating a potentially stronger market response.

Surge in LUNC Token Burns

Another contributing factor to the price increase was the significant on-chain activity leading to a reduction in LUNC's supply. Over the past week, more than 427 billion LUNC tokens were burned. On a single day, about 84.164 million LUNC were removed from circulation, while the previous day saw a reduction of approximately 691.625 million tokens. The first and fifth of December were particularly notable, with more than 600 million tokens burned on those days.

LUNC Burn Tracker

Terra Form Labs accounted for the most significant portion of these burns, responsible for approximately 58%, which combined with the short liquidations, influenced LUNC's price movement.

Will LUNC's Price Sustain Its Momentum?

From a technical perspective, LUNC managed to break above a descending trend channel on the 4-hour chart. This breakout comes after a consolidation period exceeding a month. The buying strength is indicated by substantial green MACD bars, signaling bullish momentum. The Cumulative Volume Delta (CVD) reached over $41 million heavily favoring buyers.

In recent days, LUNC's price increased over 157%, moving from $0.00002739 to $0.00007088. However, it appears that sellers are starting to push back around the high reached in July at $0.00007088.

TradingView LUNC Chart

For LUNC to continue this upward trend, bulls need to maintain their lead over the bears. The recent price movements suggest that while there may be potential for future gains, the market could still be cautious as it navigates this newfound bullish territory.

Final Thoughts

The recent surge in LUNC prices reflects a combination of market sentiment surrounding Do Kwon's case, aggressive liquidation of short positions, and significant token burns. While the outlook appears optimistic in the short term, ongoing market dynamics could impact future price stability. Investors are advised to keep a close watch on upcoming developments.