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A deeper study of Terra & LUNA

A deeper study of Terra & LUNA

Explainers Cryptocurrencies

26 Sep 2021

In this article, we will be going over the cryptocurrency LUNA. LUNA has recently entered the top 20 cryptocurrencies by market capitalization. Therefore let's evaluate what this cryptocurrency is and where it could be heading.

What is LUNA?

The LUNA cryptocurrency is the powerhouse of the Terra network. Terra is a next generation blockchain, in a similar sense to Solana being a next generation blockchain. The Terra blockchain itself is built around the growing Asian e-commerce market. The blockchain of Terra has built vast e-commerce alliances with numerous organizations, spanning a customer base of over 45,000,000. LUNA itself has multiple functions within the network. LUNA acts as the governance token, can be staked and supports the vast number of stablecoins built on Terra in order to fulfill the needs of the vast customer base within the e-commerce system.

Terra stablecoins

Terra offers a vast array of stablecoins which are pegged to various fiat currencies. The most popular Terra stablecoin is UST (TerraUSD). Other stablecoins within the Terra ecosystem include:

  • TerraEUR (euro pegged)
  • TerraGBP (british pound pegged)
  • TerraKRW (korean won pegged)
  • TerraJPY (japanese yen pegged)
  • TerraCNY (chinese yuan pegged)

The target of the asian e-commerce market is clear to see with 50% of all stablecoins within the Terra ecosystem pegged to asian fiat currencies.

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Figure one - stablecoin focus

Remainder of the Terra ecosystem

The Terra ecosystem does not consist of only stablecoins. There are numerous interesting projects built on Terra such as Mirror Protocol. Mirror protocol is a DeFi platform which allows users across the globe to invest in synthetic assets. These synthetic assets track the price of assets from other markets, such as the stock market.

For example in the figure below you can see that users can trade:

  • MIR (cryptocurrency)
  • mDOT (wrapped cryptocurrency)
  • mETH (wrapped cryptocurrency)
  • mBABA (wrapped Alibaba stock)
  • mBTC (wrapped cryptocurrency)
  • mAMZN (wrapped stock)
  • mTWTR (wrapped stock)
  • mQQ (wrapped exchange-traded fund)
  • mGOOGL (wrapped stock)
  • mSPY (wrapped stock index fund)

Figure two - Mirror Protocol

Additionally users can also borrow, mint and farm popular stocks, cryptocurrencies on Mirror protocol.

Other cryptocurrencies within the Terra ecosystem include ANC, MINE and SPEC. In total the Terra ecosystem has a market capitalization of approximately $17 billion USD and is a similar size to the AVAX ecosystem.

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Figure three - Terra Ecosystem by Market Capitalization

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Figure four - Terra ecosystem by coin categories

LUNA price action history

In May 2019, LUNA hit the cryptocurrency market at $3.27 USD. However, LUNA bled significantly over the next few months, not even seeing a slight surge during the 2020 run. From May 2019 to February 2020 LUNA fell over 90% to $0.2 USD.

Figure five - LUNA had a baptism of fire in the cryptocurrency market

You would have been forgiven for thinking that it was all over for LUNA after months of continuous losses. The pain felt by LUNA HODLers was compounded in March 2020 as the cryptocurrency fell from $0.3 USD to $0.12 USD. LUNA was one of the hardest hit cryptocurrencies during the March 2020 COVID drop.

Figure six - LUNA saw continuous losses during 2019 to early 2020

From March 2020 LUNA saw its all time low, with the cryptocurrency making decent strides from March 2020 to the start of 2021, increasing 350% (along with a 52% drop in Q3 2020).

Figure seven - LUNA somewhat recovered 2019 losses in 2020

From the start of 2021 until September 2021, LUNA has increased 3800% with the days of March 2020 long behind LUNA. The cryptocurrency has now broken into the top 20, with its ecosystem now among the most valuable in the cryptocurrency world. It is quite a remarkable recovery.

Figure eight - the LUNA 2021 price action has dwarfed all previous price action

What does future price action hold for LUNA?

While AAX does not provide financial advice, according to our analysis there is a good chance to see substantial gains in Q4 2021 for LUNA. Having completed wave (4) of the macro LUNA bullish impulse wave, it is expected that LUNA will outperform the majority of the cryptocurrency market in Q4.

The LUNA / BTC target which has been set is currently +200% from the current LUNA position.

Figure nine - LUNA / BTC chart

If the chart above comes to fruition, LUNA could see $100 USD by E.O.Y. The potential move LUNA could witness may be somewhat reminiscent of Solana's 2021 bullish (5) wave.

Figure ten - LUNA / USDT chart

Can I trade LUNA on AAX?

LUNA can be traded on the AAX spot market against the USDT pair, as shown below.

Figure eleven - trade LUNA on AAX

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