Why did Terra Classic (USTC) Rally 300% in a Day? Possible Reasons

Summary

• USTC witnessed 300% surge in 24 hours, reaching $0.069, marking a 298% gain over the past week.
• Terra Classic Labs strategically acquires 25.6 million USTC tokens, investing $500,000 to bolster USTC's value post-de-pegging in May 2022.
• Terra Luna Classic community unanimously approves on-chain deployment of terrad client v2.3.1, addressing critical issues and showcasing rapid response.
• Terra Classic saw a new all-time high of 589,000 transactions on Nov 22, indicating increased user activity and confidence. Staking ratio on Terra Classic rebounds above 15%, supporting decentralization and earning rewards.
• USTC's surge positively influences LUNC, witnessing a 45% increase. LUNA also surged by 19%.
• Binance to launch perpetual contracts for USTCUSDT on Nov 27, introducing new trading opportunities and speculation on USTC's future price movements.

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Terra Classic (USTC) has experienced an unprecedented surge, with prices soaring by 300% within 24 hours. This surge, propelling USTC to $0.067, reflects a remarkable 298% gain over the past week.

USTC 1-Day Price Chart (Source: CoinMarketCap)

This surge comes as a stark departure from the previous period of stagnation, leaving many curious about the factors driving such a rapid increase. Below we have stated potential reasons for the recent rise. In any case, the reasons listed here are not necessarily the reasons for the surge.

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Strategic Acquisition by Terra Classic Labs

Terra Classic Labs has orchestrated a strategic move by acquiring 25.6 million USTC tokens, injecting approximately $500,000 into the market at an average price of $0.021 per token.

This acquisition, aligned with the Treasury Reserve Policy, reportedly aims to fortify the value of USTC following its de-pegging from the $1 mark in May 2022. The investment is designed to enhance liquidity stability and create new investment opportunities, thereby increasing user holdings.

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Community-Driven Proposals Fueling Momentum

The Terra Luna Classic community has played a pivotal role in USTC's rally. A crucial proposal seeking community approval for the on-chain deployment of terrad client v2.3.1, has garnered unanimous support. This update addresses a critical issue related to the dyncomm ante decorator, specifically resolving the sequence mismatch problem affecting some validators during commission edits.

Furthermore, the recent proposal to safely re-enable the market module and incrementally re-peg USTC to $1 also caught the eye of many.

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Record-Breaking Transactions and Staking Surge

Recent data from the Terra Classic Foundation indicates a surge in network activity, with a new all-time high of 589,000 transactions recorded on November 22. Additionally, the staking ratio on Terra Classic has rebounded above 15%, signaling strong user confidence and support for decentralization. These metrics suggest a positive shift in user sentiment towards the project and indicate that the ecosystem is on track for recovery.

Over the past day, the asset's 24-hour trading volume increased by 1,350%, reaching $1.3 billion.

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Impacts on Terra Classic (LUNC) and LUNA

Given the close relationship between USTC and Terra Classic (LUNC), the surge in USTC's value has positively influenced LUNC, witnessing a 45% increase to $0.0001135. This reversal of previous losses hints at the potential for LUNC to explore new price levels, driven by the ongoing USTC rally.

Meanwhile, LUNA has surged by 19% in the past 24 hours, trading at $0.83, with a market cap of $491 million, making it the 99th-largest cryptocurrency.

As per recent reports, Binance launched perpetual contracts for USTCUSDT on November 27 at 12:30 UTC. This development introduces a new dimension to USTC trading, allowing speculators to capitalize on price movements relative to USDS-M through leveraged trading.