Will LUNC recover as Terra Classic burn and staking accelerates

Terra Luna Classic price has remained under pressure this week in line with the performance of Bitcoin and other altcoins.

Terra Luna Classic (LUNC) has fallen to the key support level of $0.00010, its lowest point since December 20 last year. It is down 42% from its peak in December.

A potential catalyst for LUNC price is the ongoing token burns that have accelerated over the past few months. Data from LUNC Metrics shows that the network has burned more than 397 billion tokens since May 2022.

341 million tokens have been burned in the last seven days alone and the number continues to rise. On January 10, daily burns reached over 686 million. Binance remains the largest LUNC burner, burning almost 70 billion tokens. Meanwhile, DFLUNC Protocol and LunaticsToken burned 2 billion and 1.9 billion LUNC, respectively.

These token burns helped reduce the circulating supply of LUNC to 6.50 trillion over the past two years. In theory, token burns increase the price of a cryptocurrency by reducing the supply and increasing the value of remaining tokens.

Meanwhile, more data shows that investors have increased the staked tokens over the past few days. The staking rate increased from last week’s low of 14.8% to 15%, or 981 billion LUNC tokens.

A higher staking rate is a positive sign for a cryptocurrency because it reduces the number of tokens available for sale in the market, thus relieving selling pressure. These positive metrics could help support a recovery in LUNC price once the ongoing sell-off ends.

LUNC price analysis LUNC price chart | Source: crypto.news

The daily chart shows that LUNC price peaked at $0.0001790 in December before erasing some of those gains and reaching the current level of $0.00010. This pullback occurred amid ongoing weakness in the broader crypto market.

Recently, the token broke below the key support at $0.0001054, which is the neckline of a minor double-top chart pattern. Additionally, LUNC fell below both the 50- and 200-day moving averages.

On a positive note, the cryptocurrency formed the cup and handle pattern, which is a popular bullish continuation indicator. The ongoing pullback is likely part of the hold formation. Therefore, it is possible for Terra Luna Classic price to recover as long as it remains above the key support level of $0.00009060.

If this rebound occurs, the first target to watch will be the double top of $0.000122, followed by the top of the cup at $0.0001310 and last December’s high of $0.000179. A return to last month’s high would represent a 73% bounce from the current price.