Terra Classic (LUNC) has outperformed all top-ranking cryptocurrencies so far in September and has gained almost 100% in just the last seven days.
Terra Classic outperforms the crypto market
The coin surged over 250% month-on-month to reach $0.000594 on September 8th, its best level on record. While Bitcoin (BTC) lost 4% and Ether (ETH) only 3.5% during the same period.
The gains in the Terra Classic market appeared despite its association with the defunct Terra (LUNA) token, a $40 billion project that collapsed in May. The Terra Classic is a rebranded version of the same Terra project and thus has been the subject of skepticism from analysts and investors since its launch.
However, traders have ignored such warnings in recent weeks, with a flurry of fundamental catalysts influencing them to buy the LUNC.
staking service
a New staking service goes live Acting as the first major signal behind the ongoing LUNC price rally, on the Terra Classic series on August 27th.
According to LuncStake_Bot, users have staked over 610 billion LUNCs against a net supply of 6.9 trillion units with Terra Classic. In other words, about 9% of the total LUNC supply has been taken out of circulation.
LUNC. supply and share
supply
Total: 6,903,660,538,201bet on
Bonded: 533,102,702,962
Unaffiliated: 77,003,374,763staking ratio
8.837% (bonded: 7.722%)2022-09-08 17:30 UTC#lank
– LUNC Staking[@LuncStake_Bot] 8 September 2022
Data from Staking Rewards shows that Staking Terra Classic is returning users with an annual yield of 37.8%, among the highest payouts in the crypto industry.
The higher returns may have played a key role in driving demand for LUNC, causing the price of the token to increase by over 450% since the staking service launch, as shown in the chart below.
LUNC token burn
In addition to staking, the Terra Classic developers have also introduced a token-burning mechanism to promote the reduction of LUNC.
Edward Kim, a community member at Terra Classic, proposed a 1.2% transaction tax on LUNC on-chain transactions in early September. Actions taken from this tax will eventually end up in a dead address, causing a portion of LUNC’s supply to be permanently removed from circulation.
Terra Luna Classic (#lank) skyrockets >37,000% from its bottom after Terra’s collapse
This comes after a proposal to introduce a 1.2% token burn tax on all transactions which would enable $LUNC To become a deflationary cryptocurrency.#lank I #helilink I $LUNC I pic.twitter.com/oIxI7tqVkW
— Hailey LUNC ️ (@TheMoonHailey) September 7, 2022
Interestingly, according to LUNC Burner, a LUNC burning mechanism already exists that has taken over 3.6 billion tokens out of circulation.
Big accident risk ahead
Nevertheless, some technical indicators suggest that the LUNC price rally is at risk of correcting in the near term. These include its daily relative strength index (RSI), which crossed 90 on September 8, a very overbought level that usually occurs after a price correction.
Furthermore, recent LUNC gains are accompanied by lower volumes, suggesting that traders are unconcerned about the longevity of the price rally.
First possible sign of blow-off top on $LUNC pic.twitter.com/Fn11FHevnZ
— livercoin (@livercoin) 8 September 2022
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