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Reason Behind Terra (LUNA) Surge As It’s up Over 15,862% In a Year

coinquora.com 05 December 2021 10:28, UTC
Reading time: ~2 m

Incredibly, Terra (LUNA) in the last week is up 50% notwithstanding that the crypto giant Bitcoin (BTC) is down 9.03% in the past seven days. LUNA has surged to hit a new all-time high for five consecutive days, recording over 15,862% in a year. Not to mention, its decentralized and algorithmic stablecoin TerraUSD (UST) has become the largest of its kind. Also, it keeps picking up Web3 adoption as the DeFi dollar. 

While LUNA is rising day by day, some crypto analysts are trying to discern the reason behind the bullish position of the coin. Some allege that the success is due to the Layer 1 branding. Even more, a popular memecoin speculator on Twitter, Dogetoshi says that “Luna is basically Synthetix but with Layer 1 branding instead of Ethereum app branding which is why it is being priced as a Layer 1 instead of DeFi.” The tweet generated quite a level of discussion with many disputing his assessment.

On the other hand, a crypto analyst, Zack Guzman in a Twitter thread explained the reason behind the expedient rise of LUNA. Following his tweets, he says that after Terra’s Columbus-5 upgrade, LUNA is just being burned 4x.

Crypto project @terra_money ( $LUNA ) has surged 50% in the last week to hit a new all-time high even with bitcoin down 5%

Its algorithmically-backed stablecoin $UST has become the largest of its kind and keeps picking up Web3 adoption as THE DeFi dollar

Why that is huge ⬇️ 1/X pic.twitter.com/LSUeA9HgO6

— Zack Guzmán (🎄,🎄) (@zGuz) December 2, 2021

To that effect, it has made LUNA more deflationary and more likely to rise in price so long as more people adopt UST as their stablecoin of choice. He also adds that crypto projects that win are the ones that solve real problems.

In summary, the general factor affecting LUNA supply and price is that its supply is directly affected by UST supply which is then determined by UST demand. Of note, UST demand is a function of user adoption and various other functions.

Furthermore, if LUNA supply becomes more scarce, let’s say one full year from this moment, LUNA price is expected to increase parabolically. At press time, LUNA is up 30.36% in the last 24 hours and trades at 74.73 per unit according to CoinMarketCap. 

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