LUNA Technical Analysis: Time To Say Goodbye, LUNA!

Key technical points:

Past Performance of LUNA

LUNA market prices once were above the $100 mark, but the recent crash brings it fatally closer to the $0 mark. The coin was traded at mere 10 cents and approaches absolute zero at high speed. 

Source-Tradingview

Why Did LUNA Crashed?

The crucial reason behind the LUNA crash is the interlinked relation with the UST stablecoin and the sharp sell-off in the early days of May. The link was such that a decrease in UST value would burn UST and mint more LUNA resulting in a higher supply of native tokens.  

At the beginning of May 2022, some massive UST withdrawals were conducted. The selling increased the supply and drove the price of UST down. As we mentioned, LUNA was minted, and UST was burned to control the situation. However, the system was limited to a specific amount of UST that could be burned.

UST was lowered, and many quit their holdings. UST is a crucial component of Terra's protocols, resulting in negative consequences for Terra's native token. Thus, the market price started to drop because of the sale of UST. Moreover, the supply of LUNA was growing rapidly to keep the cost of UST stable.

Upcoming Trend

Therefore, the sellers continue to find more hopeful buyers to exploit their hopes of a reversal and exit their existing positions. Moreover, the short-sellers work as a catalyst to keep the downtrend moving. Hence, we can shortly see the prices reach one-tenth of a cent and finally reach absolute zero.