Terra (LUNA) price slipped on April 11 as a broader correction in crypto assets added to uncertainties surrounding its token burn mechanism.
Bitcoin (BTC) and Ether (ETH) led the rest of the cryptocurrency market to decline, with LUNA’s price falling over 8% to nearly $91.50 and about 30% off its record high of $120 hit on April 6 , fell.
The broader decline followed similar moves in the US stock market last week after the US Federal Reserve signaled its intention to hike interest rates and sharply trim balance sheets in a bid to curb rising inflation.
Arthur Hayes, the co-founder of the BitMEX exchange, said Monday that Bitcoin’s correlation with tech stocks could take it to $30,000 next. In other words, LUNA’s high correlation with BTC this year puts it at risk of further downside if BTC fails to recover.
Story of two exposés
LUNA gleaned additional negative leads from at least two “Exposé” threads that went viral on Twitter over the weekend.
the first thread written by pseudonymous analyst @DeFi_Made_Here on April 7 questioned LUNA’s ability to maintain pegging of Terra’s native stablecoin TerraUSD (UST) as it is not backed by tangible assets.
the second thread, released On April 9, Jack Niewold, an analyst at Crypto Pragmatist – a DeFi newsletter, accused Terra co-founder Do Kwon of receiving all LUNA tokens that were destined to be “burned” to mint UST.
He also claimed that the Luna Foundation Guard, a non-profit organization that supports the Terra ecosystem, used a percentage of the LUNA supplies burned to buy Bitcoin.
Kwon dismissed the claims in a tweet-to-tweet reply to Niewold, calling him a “made-up clickbait.” The self-proclaimed “Master of Stablecoin” claimed that Terra burns LUNA 1:1 mint new UST, which can be viewed by testing a swap on the Anchor Protocol dashboard.
Also Jose Maria Macedo, head of crypto research platform Delphi Digital devastated Niewold’s thread as “absolutely awful”.
Key LUNA price support is breaking
The recent LUNA sell-off also caused the price to fall below its key moving average support against the US Dollar.
Related: Bitcoin plunges to April lows as US dollar strength hits highest level since May 2020
More specifically, the Terra token fell below its 50-day exponential moving average (50-day EMA; the red wave in the chart below) and is now at $90, almost two months after reclaiming it as support.
The recent move from support to resistance leaves LUNA open to an opportunity to extend its downtrend towards its 200-day EMA (the blue wave) by $67 (about 20% lower than the April 11 price) in April.
The 200-day EMA also coincides with the 0.382 Fib line of the Fibonacci retracement chart drawn from the $4 swing low to the $106 swing high, thus providing LUNA with two-layered support against bears.
Conversely, an early bounce off the 0.236 Fib line (near $82) could see LUNA retest $106 as a preliminary upside target.
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https://cointelegraph.com/news/terra-price-key-support-level-breaks-after-30-weekly-drop-more-pain-for-luna-ahead Terra Price Key Support Level Breaks After 30% Weekly Drop – More Pain For LUNA Ahead?