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Terra is about to witness a spike in network adoption as it enables interoperability with other blockchains. The boost in use cases could help push LUNA into higher highs.
Terra Goes Multi-Chain
Terraform Labs, the South Korean company developing the stablecoin-focused blockchain Terra, is making significant strides to increase the blockchain’s utility.
With the upcoming launch of Inter-Blockchain Communication (IBC), the firm is aiming to open the network to countless dApps in the Cosmos ecosystem. IBC will help different blockchains connect and communicate, allowing the transfer of tokens between those chains that adopt the protocol.
Wormhole’s expansion to Terra is also another significant milestone ahead of IBC’s launch. The cross-chain bridge will enable Terra-native assets like UST and LUNA to be transferred to Solana, Ethereum, and Binance Smart Chain through one interface.
Do Kwon, the co-founder and CEO of Terraform Labs, says that demand for UST in cross-chain environments will accelerate the expansion of the stablecoin’s supply. Earlier this year, he said that he thought UST would hit a market cap of at least $10 billion by the end of 2021.
Meanwhile, Terra’s native token, LUNA, has recently bounced off a crucial support level.
LUNA suffered a 30% correction after reaching a new all-time high at $49.60 on Oct. 4. The sudden bearish impulse appears to have been contained by the 50-day moving average as prices were able to rebound from this crucial support level. The formation of a buy signal per the Tom DeMark (TD) Sequential indicator also contributed to the upward price action LUNA has experienced over the last few days.
Now that LUNA presents a green two candlestick trading above a preceding green one candle on its daily chart, the TD’s bullish formation can be considered validated. Further buying pressure could lead to another two green candlesticks or the resumption of the uptrend.
The supply zone between $42 and $44 can act as stiff resistance, preventing LUNA from advancing further. Still, a decisive daily candlestick close above this barrier could result in a retest of the all-time high at $49.60.
As long as the 50-day moving average at $37 continues to hold as support, the bullish outlook should prevail. However, failing to stay above this strong foothold could result in significant losses as the next important demand zone sits around $31.