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The Terra Luna Classic (LUNC) blockchain is on the cusp of a monumental burn event, spurred by a directive from the U.S. Securities and Exchange Commission (SEC). In an effort to restore stability following the infamous collapse of the Terra ecosystem in 2022, this burn is set to significantly reduce the circulating supply of both LUNC and TerraClassicUSD (USTC). With up to 275 billion LUNC tokens on the line, this initiative could be a game-changer for the Terra community.
The SEC’s Directive And Its Impact
The SEC has mandated TerraForm Labs, the parent company of the Terra ecosystem, to burn a large number of tokens held in wallets controlled by the organization. These wallets include assets such as USTC, LUNA, Wrapped LUNA, and LUNA 2.0. According to the SEC’s statement, “The judgment requires the defendants to burn or destroy private keys in TerraForm’s possession to wallets or blockchain assets holding UST, MIR, LUNA, Wrapped LUNA, and LUNA 2.0.”
This directive affects not just the tokens themselves but also key protocols in the Terra ecosystem, like Mirror and Anchor Protocols. These platforms were instrumental in the token economy before the collapse, and the burn order now looms large over their future operations. The magnitude of this burn makes it one of the largest events in LUNC’s recent history and a crucial moment for the Terra community.
One major aspect of the burn is its effect on the Shuttle Bridge, a tool that facilitates transfers between Terra and Ethereum. The bridge will permanently close, and users with assets still on the Shuttle Bridge are advised to withdraw their tokens as soon as possible before the shutdown.
LUNC Price Struggles Despite Burn News
Despite the impending burn, Terra Luna Classic’s price has shown minimal movement. While Bitcoin and Ethereum have enjoyed substantial gains in the past month, LUNC has struggled to break past its key resistance level of $0.000095. The token hasn’t been able to claim this level since early October, leaving many investors questioning whether the burn will have a meaningful impact on price.
The market sentiment indicator, Chaikin Money Flow (CMF), remains in negative territory at -0.19, signaling that large investors are reducing their LUNC holdings ahead of the burn event. This lack of interest is also reflected in low trading volumes, raising concerns about the token’s short-term prospects.
However, there was a brief glimmer of optimism. On October 22, LUNC’s price rose 2.93% to $0.00009409, while the 24-hour trading volume spiked by 135.47%, reaching $50.61 million. Despite this uptick, LUNC’s market cap has remained below $1 billion since March 2024.
Future Outlook for Terra Luna Classic
While Binance’s periodic token burns have had little impact on LUNC’s price, this upcoming burn could be different due to its sheer scale. With the destruction of 275 billion LUNC tokens, some traders are optimistic that this initiative could finally give the token the momentum it needs to recover lost ground.
Also Read: Binance Burns 1.1 Billion LUNC Tokens – A $116K Move Towards Terra Classic’s Revival!
Moreover, LUNC has seen a surge in derivatives trading, with Binance reporting an 88% increase in trading volume for LUNC derivatives. Despite this activity, the price has yet to reflect significant upward momentum. Interestingly, twice as many long positions are being opened compared to shorts, indicating that some traders are betting on a future price breakout.
As the October 31st burn deadline approaches, the Terra Luna Classic community is watching closely, hoping this massive token reduction will mark a turning point for the embattled altcoin.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
A lifelong learner with a thirst for knowledge, I am constantly seeking to understand the intricacies of the crypto world. Through my writing, I aim to share my insights and perspectives on the latest developments in the industry. I believe that crypto has the potential to create a more inclusive and equitable financial system, and I am committed to using my writing to promote its positive impact on the world.
