In the past 24 hours, Terra Luna Classic [LUNC] has surged by more than 90%, at press time, marking its second straight day of gains. The rally also pushed LUNC to second place among trending tokens on CoinMarketCap.
This price resurgence has been fueled by renewed attention on founder Do Kwon’s upcoming case decision, scheduled for December 11th.
Although Do Kwon has already pleaded guilty to fraud tied to the LUNC collapse, a development that would normally weigh negatively on sentiment, the market has moved in the opposite direction.
Despite the unfavorable news, LUNC’s price has climbed sharply, leaving investors questioning the drivers behind this unexpected rally.
Liquidation of shorts accelerates rally
Apart from the increase in interactions due to Do Kwon’s discussions, the spike in massive shorts liquidation played another key role.
At the time of writing, LUNC pair had the largest short liquidation, ahead of Ethereum [ETH] and Bitcoin [BTC].
As per CoinGlass data, the total amount of liquidity wiped out from LUNC pairs exceeded $1.47 million in an hour and $5.19 million in 12 hours.
This accounted for about 10% of all short position liquidations.
Source: CoinGlass
The alternative token, LUNA, created by Do Kwon after abandoning LUNC, was also in the charts, though it didn’t enjoy as much trading activity.
However, it extracted some liquidity from LUNC, which suggests the move could be more robust.
LUNC’s token burns surge
Additionally, the on-chain activity, particularly the reduction in supply, was executed perfectly. The number of weekly burned tokens surged to more than 427 billion LUNC.
For the day, 84.164 million LUNC had already been burned. The previous day’s supply reduction was about 691.625 million LUNC.
The 1st and 5th of December marked the biggest burn days this month, with over 600 million tokens destroyed.
Source: LUNC Burn Tracker
Terre Form Labs had burned the largest portion among all burns, accounting for about 58%. The on-chain activity and short liquidations influenced the price reaction.
Will the technical outlook remain bullish, or will the decision on Do Kwon’s case change it?
Will LUNC’s price maintain its momentum?
On the charts, LUNC had broken above a descending trend channel on the 4-hour chart. The consolidation had lasted more than one month before the breakout on the second day of December.
The strength of bulls was evident in MACD bars, which were huge and green, at press time. The Cumulative Volume Delta (CVD) exceeded $41 million in favor of buyers and was continuing to rise.
Looking at the move over the last two days, LUNC price surged over 157% from $0.00002739 to $0.00007088. However, sellers have started to reject around July’s highs at $0.00007088.
Source: TradingView
For the rally to continue, bulls must maintain their dominance over LUNC bears. Their strength was evident in the recovery from the decline that had persisted since late February.
However, the price has only just broken above the bearish structure. This could limit further upside, as the market may still respect the bear zone.
Final Thoughts
- LUNC rallies 90% a day due to discussions on its founder’s case decision, increased burn rate, and short liquidations.
- LUNC’s price can retain its trajectory only if bulls manage to dominate bears going forward.
Source: https://ambcrypto.com/terra-luna-classic-decoding-luncs-90-surge-in-24-hours/
