Terra’s native token, LUNA, has suffered a casualty from the ongoing correction that has hit the crypto market. The correction, so far, has resulted in a loss of Bitcoin’s critical level of support at $38,000. According to reports emanating from WuBlockchain, the LUNA token has gone down by 9.6% within a day.
The slide of LUNA’s token value by 9.6% comes after the LUNA Foundation Guard announced that it purchased Bitcoin to the tune of $1.5 billion. The new Bitcoin purchase is to be added to the LUNA Foundation’s UST reserve.
Terra (LUNA) Suffered a 12.66% Loss in the Past Week.
A close look at Coinmarket.com reveals that the native currency of Terra, LUNA, dropped close to 10% of its value within the past day. The report equally has it that the loss of the token in the course of a week amounted to 12.66%. This put most of the losses suffered by LUNA within the last 24 hours.
LUNA’s Predicament is Connected with Bitcoin and the Feds
From a technical perspective, LUNA’s losses have been attributed to two major factors. The first is the Bitcoin’s loss of its $38,000 level of support in the course of the week as news filtered in about the Federal Reserve interest rate increase. The second factor came from the Federal Reserve itself as it plans to begin Quantitative Monetary Policy Tightening as early as the 1st of June.
The monetary policy of quantitative tightening entails the central bank’s reduction of financial assets recorded as possessed on its balance sheet. This is done when the central bank lets the bonds it bought get to maturity and runs them off from its balance sheet. It, thereby, creates money it used to purchase the bonds from thin air.
What LUNA Daily Records Says
With regards to price actions, LUNA’s daily analysis shows that the token has got some support at the important 200-period daily moving average. This level of support is close to the local low point at $72.08, which was set in the early hours of Saturday.
At the moment of putting this piece together, the pair of LUNA/USDT was trading at $73.57. If there is a further break of this level of support, it might then lead to further losses. The daily MFI for LUNA is basking in the neutral zone of 40, while the relative strength index is oversold at 30.
Nevertheless, the daily MACD of the token is indicative of further sales as the general crypto market closes for the week.
Therefore, traders are advised to be cautious while trading on Terra for the long term. It is said that the low volume of trade over the weekend could bring in more sales that would then result in the loss of the 200-period moving average. If that becomes the case, it would inevitably be the beginning of a bearish trend in the market for Terra (LUNA).