LUNA now finds itself at the center of the controversy that unfolded in May 2022. The SEC maintains that LUNA transcended the classification of a digital dollar, considering it a security.
LUNC, the resilient token that emerged from the tumultuous aftermath of Terra’s downfall, witnessed a notable 14% drop, reflecting a major legal setback dealt by a US District Court.
This court decision favored the Securities and Exchange Commission (SEC) in its legal challenge against Terraform Labs, the company that runs the Terra blockchain, injecting uncertainty into the fate of the embattled cryptocurrency.
Additional Pain for LUNC
Terraform Labs allegedly did not register LUNC as a security. The severity of the situation intensifies as Do Kwon, co-founder of Terraform Labs, faces accusations of orchestrating the sale of these unregistered securities, putting additional pressure on LUNC’s future trajectory.
Judge Jed Rakoff’s final ruling echoes a harsh reality: both LUNA and MIR, another token within the Terra ecosystem, are recognized as securities. This legal stance paves the way for possible additional actions by the SEC against Terraform Labs, casting a shadow over the future of LUNC.
The abrupt change in market sentiment is evident as LUNC’s weighted sentiment, a metric that measures market optimism, plummeted to -0.510 following the ruling. This marked transformation from bullish to bearish suggests a loss of investor confidence in the token’s near-term prospects.
The social domain, reflecting the attention paid to LUNC, saw an increase on December 29, in correlation with the court ruling. However, this increased interest quickly dissipated, indicating that the initial impact was short-lived, and traders may have quickly incorporated the negative developments into their decision making.
LUNC Price Analysis: Overall Downtrend with Reversal Potential
A downward trend is confirmed over the last seven days, reflecting the bearish sentiment following the court ruling. However, technical indicators suggest a potential for reversal, as follows.
RSI: Falling towards the oversold zone, implying a possible price rebound.
Negative divergence: hints at an upcoming upward trend, although legal uncertainty adds complexity.
EMA: The recent crossover of 20 EMA above 50 EMA offers a bullish signal, albeit a weak one.
Impact of Judicial Ruling
The sharp drop on December 29 coincides with the ruling, which highlights its important impact. The continued bearish momentum suggests ongoing concerns about the legal and regulatory landscape.
Although the LUNC team had distanced itself from Do Kwon, it has not been easy to disassociate the token from the events surrounding the collapse of LUNA-UST in May 2022. Consequently, the weighted sentiment around LUNC had fallen to -0.517.
Support and Resistance Levels
As for support levels, the $0.00013 area has acted as a barrier, preventing the price from falling further. Maintaining this level is crucial for bullish momentum.
Regarding resistance levels, breaking through the $0.00015 level could indicate a stronger uptrend, but overcoming psychological resistance may be challenging.
Volume and Historical Trends
Low volume indicates investor indecision, possibly due to legal uncertainty. Compared to historical trends, previous support and resistance levels offer limited guidance due to the recent decline. Past volatility patterns may not be reliable given the unique legal context.
Overall, technical indicators present a potential for reversal of the LUNC, but the court ruling casts a shadow of uncertainty. Closely monitor key support and resistance levels, watch for changes in volume, and exercise caution due to volatile market conditions.
By Audy Castaneda
