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A couple of days after its launch, the new LUNA or LUNA2 token from the Terra network continues to experience high volatility levels. The cryptocurrency was deployed as a result of the collapse of the old LUNA or LUNA Classic which lost almost 99% of its value in a little over a week.
Related Reading | Ethereum’s Optimism Airdropped Governance Token, Here Is How It Went
This resulted in billions of dollars in losses for retail investors as the Anchor Protocol, the platform which promised stablecoin UST stakers a 20% annual percentage return (APR), and the whole Terra ecosystem enjoyed high popularity.
At the time of writing, LUNA2 trades at $6.65 with a 7% loss in the 4-hour chart. The cryptocurrency was able to reach as much as $10 at its high but could continue to experiment with downside volatility.
Data from Material Indicators (MI) hinted at further losses when the price reached its all-time high. Based on the Trend Precognition indicator for the daily chart, LUNA2 could re-test support levels.
The crypto market might play against any potential recovery. The largest cryptocurrencies, such as Bitcoin and Ethereum were recording gains during today’s trading session after weeks of sideways movement.
Bitcoin was almost 9%, but all the profits have been lost in lower timeframes. The number one crypto by market cap could return to its recent range of around $28,000 to $30,000 if the bulls are incapable of pushing back against the increased selling pressure.
Analyst Ali Martinez identified $29,800 and $28,600 as the next area of interest for any potential support. LUNA2 traders could benefit from a relief bounce in these areas but might see further downside action in the short term.
#Bitcoin got rejected by the 200MA on the 4hr chart as anticipated!
Now, $BTC is testing the $30,750 support level. Failing to hold above it could send #BTC to the next areas of support at $29,800 and $28,660.
Only a sustained close above the 200MA can send prices to $34,750. https://t.co/Kb49f4Krn1 pic.twitter.com/YHwfKvhX4o
— Ali (@ali_charts) June 1, 2022
As part of the creation of LUNA2, previous LUNA holders are entitled to an airdrop. This measure was aimed at mitigating part of their losses and providing them with a tangible solution. However, some critics believe the initiative will be insufficient and could contribute to the downside price action as users receive and dump their tokens on the market.
Users Express Concerns About Exchanges Supporting LUNA2
Before its launch, there were a lot of doubts about the future of any new LUNA token. When the price of the original cryptocurrency collapsed below $0, crypto exchange platforms rushed to remove it and terminated any trading positions with LUNA, for the benefit or detriment of the trader.
Now, the same platforms have been supporting LUNA2. Many users have been calling out these venues as they consider the token could follow LUNA’s trajectory into oblivion.
Jesse Powell, CEO at crypto exchange Kraken, addressed these concerns. He said the following on the LUNA2 and LUNA:
I don’t necessarily see them as related. Is there a technical takedown of LUNA2? Does LUNA2 have the same flaws? I’m not an expert on the coin but presumably LUNA2 has learned something from LUNA. Is supporting LUNA2 and the airdrop improving the situation for LUNA holders?
Related Reading | LUNA 2.0 Suffers Significant Price Correction Hours After Launch
In addition, Powell claimed the LUNA crash might have been the cause of “incompetence” rather than a “scam”, as many critics believe. In that sense, he claims listing a cryptocurrency is different from endorsing it and added: “All assets have risk”.
