Why LUNA’s Recent Rally Could Be The Start Of A Bullish Trend

Reynaldo Marquez

4 years ago

3 mins read

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Amongst the best-performing assets in the crypto space over the past week, Terra (LUNA) has registered 18.9% gains over the weekend. Just behind AAVE (+19%), SNX (+20.8%), and SUSHI (+21.8%), LUNA has managed to outperform YFI and RUNE, two of the most resilient DeFi assets, per a Messari report.

Developed by Terraform Labs as a blockchain to support stable programmable payment and an “open financial” infrastructure with a lending protocol and a synthetic assets platform, Terra’s ecosystem is composed of a basket of fiat pegged stablecoins. LUNA is used to “stabilized” this basket.

Terra has the ultimate objective of replacing banks, credit card networks, and payment gateways, as stated in the protocol’s official website. Therefore, Terra has created a blockchain layer with solutions that can be adopted by merchants and consumers. Since its inception:

(…) it continues to steadily provide infrastructural improvements and tools for the foundations of laying down a credibly neutral, distributed, and radically transparent ecosystem.

LUNA is trading at $14,21 with a 6.3% in the daily chart. In the weekly and monthly chart, LUNA has 8% and 30.6% losses, respectively. Although it has been following the general sentiment in the market, LUNA and Terra’s ecosystem seem poised to resume their bullish momentum.

Terra LUNA LUNAUSD — LUNA with moderate gains in the daily chart. Source: LUNAUSDT Tradingview

Terra (LUNA) with potential to drive further demand

LUNA holders can use the token to obtain staking rewards from three main sources: compute fees or gas fees, taxes, and seigniorage rewards. The rewards are determined by the amount of LUNA staked. If the transaction volume on Terra’s blockchain increases, so do the rewards receive by LUNA holders.

Therefore, the rewards function as an incentive mechanism to bet on Terra’s long-term growth. Stablecoin UST, part of the ecosystem, saw an 800% growth in 2021, per a report by CoinGecko. This stablecoin climbed to the 5^th position by market cap. The report claims:

Unlike most ETH-based algo stablecoins, UST has managed to create a reliable peg through an ecosystem than incentivizes usage and attracts a strong community.

Mirror protocol is powered by smart contracts based on the Terra network and is a major source for UST demand. The protocol allows users to create synthetic assets or Mirrored Assets, like stocks, that “mimic” the price of the real-world asset.

CoinGecko stated that Terra “capitalized on Robinhood debacle” when the GameStop (GME) drama reached its peak. Also, Terra’s Anchor Protocol offers a product with a 20% fixed interest rate based on UST. The report states:

Upcoming project such as Alice, SPAR And Vega are expected to further strengthen the demand for UST.

As reported by staking provider SmartStake, there was $4,7B LUNA staked as of April 17^th with $223 million deposit in Anchor UST and $518 million in Anchor bLuna as collateral. Mirror Protocol as $2,078,234,849 on its platform. In total, Terra has a Total Value Locked of over $7 billion.

Terrans – Wondering about total TVL of #Terra network?

– $Luna staking $4,794,505,012
– Anchor UST deposit $223,000,000
– Anchor bLuna collateral $518,457,100
– Mirror Protocol $2,078,234,849

Total TVL$7,614,196,961 ($7.6b)

will add 2 https://t.co/bZD3tNFHiJ @terra_money pic.twitter.com/zr0Tggbgpc

— Smart Stake (@SmartStake) April 17, 2021

LUNA has been listed on Bitfinex, Tokocrypto, Bitfinex and is becoming a key component of Binance and its ecosystem.

Do Kwon, co-founder of the Terra ecosystem, shared a tweet by James Wang, an analyst at investment firm ARK Invest, with a highly bullish perspective on LUNA. Wang is a MIR holder and an active voter on its governance model.

Founded by Catherine Woods in 2014 and with $52.85 billion assets under management, ARK Invest is one of the most important investment firms in the U.S. It currently holds the “largest” Exchange Traded Fund (ETF) portfolio in the traditional market.

Do Kwon asked James Wang if they shall get ARK Invest to allocate capital on Mirror, Wang replied: “Yes!”. However, no official announcement has been made by Terraform Labs or Ark Invest.

Max hype/reality: Cardano $ADA
Max reality/hype: Terra $LUNA

— James Wang (in NYC) (@draecomino) April 19, 2021

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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