HomeCryptoDespite the surge in Terra (LUNA) and LUNA Classic (LUNC), investors are...

Despite the surge in Terra (LUNA) and LUNA Classic (LUNC), investors are betting to the downside

This Sunday both Terra (LUNA) and LUNA Classic (LUNC) soared, investors are projecting a decline this week. 

Investors’ projection is based on the fact that every time these currencies rise, a massive decline follows. 

Lack of news endangers LUNA

Terra Classic in these summer months had grown exponentially due to the return of staking, and the proposal to introduce a burning mechanism to increase the scarcity of LUNC. The latter proposal had been adopted almost immediately by Binance in its role as an exchange.

The effect of this news wore off and, as is often the case, the price deflated, demonstrating that altcoins in particular, are driven by the news. Obviously, the bigger and more capitalized the tokens, the harder this is, but we also had a recent example with Solana.

A large part of the future of the value of the LUNA token is tied to the fate of the project, which makes no secret of its ambition. If the Terra protocol were to grow and evolve, as in the plans of the developers, bringing technological innovations capable of imposing itself in the decentralized sector, the price of the LUNA token can also be expected to grow.

Just as has happened with Ethereum, Binance, or Solana, solid projects that manage to demonstrate an advantage in terms of network and blockchain and that are adopted on a large scale can easily reach very high prices for their tokens, in terms of hundreds and even thousands of dollars per token.

But for the time being, we have no definite news regarding the project or the release of any updates. so it is fair to say that at the moment, this lack of news of Terra’s project, puts the token in an unstable situation and investors therefore decide not to bet too much on Terra’s ecosystem. 

The collapse of LUNA is not similar to what is happening today

Often, the situation that saw the Terra ecosystem implode in May 2022 is compared to the disastrous collapse of FTX. As similar as the situations may seem at first glance, there are several differences.

As far as LUNA is concerned, there is no question of misappropriation or misuse of funds, because they were used only to defend the stablecoin. The entire defense of the peg occurred in the open markets, with no special preferences for any party. All LFG funds are held in self-hosted wallets, have not moved since the May 16 tweet, and have not been frozen.

Do Kwon’s comments

Luna’s collapse is not similar to the recent failures of other crypto, the TFL founder explains:

“While there have been a number of recent failures in cryptocurrencies, it is important to distinguish between the case of Terra, where a transparent, open source decentralized stablecoin failed to maintain peg parity and its creators spent proprietary capital trying to defend it, and the failure of centralized custody platforms where its operators abused other people’s money (client funds) for financial gain.

We hope this report shows our organizations’ commitment to transparency and the broader crypto ecosystem, and we are more committed than ever to learning from our failure and continuing to build more transparent, decentralized and resilient systems.”

According to Do Kwon, it is important to specify that there is a huge difference between what is happening now with the failure of FTX and the collapse of the Terra ecosystem. Terra’s stablecoin was decentralized and transparent, unlike what is happening now.

The executive, who has been issued a red notice by Interpol, said that both TFL and LFG did everything within their capabilities to prevent such an outcome, whereas this is not the case with the centralized custodial platforms whose operators abused customer funds.

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