The unexpected rise in the price of LUNA surprised crypto market insiders as no news or developments could excite regular traders. A tax proposal to reduce the supply of tokens, which includes wallet interactions and smart contracts, may have motivated the increase in the value.
After reaching intraday highs of USD 7.20, the native token of the Terra blockchain is trading at around USD 6.04. The collapse of the network in May led to the creation of a new Terra (LUNA), which has accelerated remarkably over the last 24 hours.
LUNA recently jumped over three times, going from a low of USD 1.91 to a high of USD 7.82. The trend persisted as the price remained above the USD 6 mark.
Following the collapse, the community of the Terra ecosystem voted in favor of Proposition 1623. It drove the development of a new blockchain and the launch of an airdrop of new tokens.
The launch of the genesis block of the new chain replacing the previous Terra chain, renamed Terra Classic, occurred on May 28th. The name of the first native token also changed into Terra Luna Classic (LUNC).
Since no news or developments related to the network could excite regular traders, the unexpected price increase of LUNA surprised crypto market insiders.
According to the firm LunarCrush, the sharp rise in mentions and interactions on social media platforms has recently led to a speculative retail frenzy. However, other traders consider that the whales sold their LUNC to acquire LUNA and vice versa.
A Lower Supply of LUNA May Have Caused the Price Rise
The price of LUNA recently surprised everyone after increasing by 50.58%, entering the top 100 in the cryptocurrency ranking. The token has risen for four consecutive days, accumulating a 77.36% gain over the last week.
The tax proposal to reduce the supply of LUNA tokens may have motivated the increase in the price. The 1.2% tax on all transactions will include wallet interactions and smart contracts if the plan receives approval.
The burning of LUNA tokens might take effect on September 20th at the Terra Classic height of block 9,475,200. Binance will change the minimum and maximum withdrawal amounts and fees for LUNC and USTC.
However, renowned cryptocurrency analyst Crypto Chief warned that LUNC had risen nearly 330% since August. He claimed that the rebranded version of Terra (LUNA) is bad news and that investors should avoid it.
The LUNA price plummeted in May when its stablecoin lost its parity with the US dollar, dropping by over 99.9%. According to the Capo papers, LUNC will soon face a significant collapse.
Meanwhile, Bitcoin and Ether Might Rise despite the Bearish Trend
Crypto Chief predicts a bearish trend for other crypto assets, including Bitcoin (BTC). He considers the pioneering cryptocurrency might rise to between USD 22,500 and USD 23,000 after regaining support near USD 19,600.
A chart indicates that the cryptocurrency might sink into the USD 14,000-USD 16,000 buy zone sometime in October. Regarding Cardano (ADA), the price will rise to around USD 0.55 before dropping to USD 0.35 in mid-September.
Ether (ETH), the second-largest cryptocurrency by market capitalization, will follow a similar path. According to the analyst, the best smart contract platform will rise to USD 1800 before dropping to around USD 1350.
By Alexander Salazar
