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LUNA abruptly dropped in the last few days. A new plan for its revival was announced . But because the fall was so strong, a revival of the cryptocurrency looks almost impossible. Investors have lost their savings. It will take a huge amount of time and effort to build a community again and gain investors’ trust.
Even if LUNA tokens rise in price again, will the community trust their savings to Terra UST or LUNA? Investors, for the most part, are just waiting for the moment to withdraw their investment with minimal loss.
How UST and LUNA are related
UST is an algorithmic Stablecoin and Terra LUNA is a blockchain-based cryptocurrency linked to UST. UST maintains its price by issuing LUNA when the price falls below $1, and vice versa.
Terra LUNA owners can vote on management protocols.
UST sought to become the largest decentralized stablecoin based on algorithms.
What’s going on with LUNA
The price of LUNA has dropped from $115 to less than $0.0001 in a few days. As of this writing, the coin is trading at $0.00019049.
If an investor had purchased 100 LUNA tokens worth $11,500 in April, they would now have less than 2 cents worth of tokens left.
UST lost its peg to $1 and fell sharply. To maintain the peg, the algorithm continued to issue and sell LUNA to buy UST.
The number of LUNA tokens in circulation increased from 340 million to 6.5 trillion.
LUNA investors lost all of their investment in the token in less than a week. Although Terra founder Do Kwon has proposed a plan to revive LUNA, it is too early to say whether this will be enough to regain investor confidence.
Terra LUNA revival plan proposed by Do Kwon
Do Kwon, in a post on the Agora forum, said Terra LUNA should be branched out in a hard fork, and the new blockchain should be limited to 1 billion new tokens. He suggested that validators reset the network and distribute the 1 billion tokens as follows:
40% – 400 million tokens to LUNA holders who bought the coin before the UST’s $1 peg was canceled.
40% – 400 million tokens to UST holders.
10% – 100 million tokens to LUNA holders who bought the coin after the UST’s $1 peg was canceled and before the network shutdown. This is to reward LUNA buyers for their role in ensuring the stability of the network.
10% – 100 million reserve tokens for future development
However, distributing tokens to holders who have held them on centralized exchanges is not easy. Exchanges must develop a plan for how this can be achieved.
The current focus is on keeping the Tier 1 blockchain up and running and increasing the number of developers and users. Once the emotions subside, the focus can shift to reviving the decentralized monetary ecosystem.
Is this new plan enough to revive LUNA
Do Kwon’s plan sounds good, but whether it will be enough, time will tell. There are a lot of questions about how to implement it. The LUNA brand has already lost credibility. And without credibility, there is no liquidity or new money for the project. Even with this plan in place, there is a very high probability that the LUNA price will not return to its maximum levels.
Forecast for 2022: Can LUNA reach $1
LUNA currently trades at $0.00019049 and has more than $6.5 trillion outstanding. If these tokens are burned down to a balance of 1 billion coins, LUNA’s price should be close to $1.23, assuming the current market capitalization is maintained.
Thus, the value of LUNA could exceed $1 when new LUNA tokens are distributed. Positive investor expectations could give the price an upward push. It all depends on community sentiment.
As of April 4, 2022, LUNA’s market capitalization exceeded $40 billion and its current market capitalization is $1.22 billion. If LUNA were to peak in terms of market capitalization, LUNA could be valued at $32.78.
If even considering this most optimistic scenario, it would not be realized instantly, but would take a considerable amount of time.
Forecast for 2022 and beyond
Analysts have different forecasts for the change in the price of the LUNA coin for 2022.
WalletInvestor still describes LUNA as a “great investment” and predicts bullish growth for the cryptocurrency. The token is expected to exceed $50 in November 2022. His one-year price forecast for LUNA cryptocurrency is $71.93, and the site suggests it will rise to $356.49 in five years.
DigitalCoinPrice doesn’t think LUNA will break the $1 mark again. The LUNA cryptocurrency forecast says the average price will remain at $0.0002 this year. It is expected to rise slightly in 2025, when the average price is projected to be $0.0003. By 2031, the Terra LUNA coin price is projected to rise to $0.001.
Some of those looking further into LUNA’s future are optimistic. Gov Capital. expects Terra LUNA to rise to $107.19 in a year. His price forecasts for Terra LUNA suggest that it will exceed $950 in 2027.
Meanwhile, the LUNA cryptocurrency forecast from PricePrediction suggests that a revival is unlikely, and the cryptocurrency will have an average price of only $0.0007 in 2025. LUNA is expected to gradually rise and reach $0.002 in 2028. According to the LUNA cryptocurrency price forecast, the cryptocurrency is expected to reach $0.005 in 2030.
LUNA coin price forecast from. EconomyWatch is more optimistic. The LUNA coin’s 2025 price forecast says it will rise to $100. The site claims that by 2030 most of society will be based on blockchain, and as a result LUNA will be valued at $150.
The future of Terra LUNA cryptocurrency
While some of LUNA’s price forecasts are optimistic, its ecosystem is currently going through a tumultuous period. Despite all efforts to secure the blockchain for the future, the collapse in cryptocurrency prices has given investors a gloomy view of Terra’s native coin.
Since the launch of the core network in 2019, the network has evolved into a vibrant ecosystem, offering a range of DeFi products as well as a platform for developers. According to DeFi Llama, more than 90 apps were launched on the Terra LUNA network, and in early May 2022, it was DeFi’s second-largest blockchain by total blockchain value (TVL). However, after the collapse, $30 billion in TVL was wiped from the blockchain, a loss of more than 90%.
The cryptocurrency world is a rapidly changing landscape, and coins that were initially successful can quickly become worthless. The case of LUNA confirms this. As the stable UST coin has lost its peg to the dollar, and LUNA’s price has plummeted in recent weeks, Terra LUNA’s future hangs in the balance.
Such a fall for a cryptocurrency with a multi-billion dollar capitalization has never been seen before in the crypto market. The problems of one stabelcoin have triggered a mechanism for the entire cryptocurrency market to fall. There is nothing to draw an analogy with in this situation. It is likely that the LUNA story will end at current levels or even lower. There is a probability that the market will give credit and the price of LUNA will grow after all.
Everything stated in the article is the private opinion of the author and DOES NOT constitute financial advice or a guide to action. Each investor or trader should be guided by his or her own analysis, forecasting, risk and money management when making trading or investment decisions.
Author: Elvir, analyst at Freedman Club Crypto News
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