Terra LUNA has been tracking the crypto market for most of 2021 while it has shown incredible buying pressure towards the end of this year. Terra is burning tokens, but what does that mean for the price action? Should it bring deflation?
Terra Daily Chart Analysis – LUNA is heading for new highs
Terra, an algorithmic one activated by smart contracts StablecoinProject has been showing incredible upward pressure since the end of July. At the time, it was trading at $ 5, while it hit nearly $ 80 earlier this month, despite the crypto market having been in decline for more than a month. Pressure still remains bullish after moving off resistance has ricocheted off and the price is now heading for the highs again, where it will likely reach new highs before the end of the year.
There are several reasons for this rally. Terra uses its native token LUNA to ensure the price stability of stablecoins such as UST. to maintain coin to meet demand for LUNA. coin remains high. The total value of DeFi has exceeded $ 14 billion while another large Terra LUNA fund, valued at $ 50 million, is provided by venture capital firm Chiron.
Although the proposal to burn a large number of LUNA tokens from community pools has had a positive impact. The community passed the proposal in early November, which was then valued at $ 4.5 billion. The price was then around $ 50 while the price is now over $ 70, the value should be higher now. The burning takes place every 800 blocks produced and is used to adapt the structure of the token for the new Columbus 5 upgrade and to change the way in which UST is produced.
The UST coins obtained from the incineration are allocated to the community pool in order to later decide what to do with these funds. There have been some swap transactions since the proposal was voted on. Some of these funds will certainly be used for the Ozone decentralized insurance protocol built on Terra and the community will decide the amount again after the entire supply is burned. This is the first time in crypto history that such a large amount of token is burned and it is already inflation hence the upward momentum in LUNA / USD last week while most Cryptocurrencies were declining.
Source: Crypto News Deutsch