Is it a good time to buy?

LUNA is a blockchain used for launching algorithmic stable coins and now ranks among the top DeFi platforms when it comes to the total value locked in circulation.

LUNA has been trending higher in recent days but has gained even more momentum in the past 48 hours. By closing 40% higher, LUNA was among the biggest winners of the past week.

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The news that Luna Foundation guard (LFG) has created a reserve denominated in Bitcoin has caused the markets to react positively. This will act as an additional layer of stability and security for Terra USD, which is currently struggling with sharp price swings due to the low liquidity status on exchanges.

LFG has announced that it will invest $1 billion to build its Bitcoin reserves. The best of this news? All LF’s coins are locked for 4 years meaning they can only be traded after those periods. This boosts investor confidence across multiple platforms, including LUNA, and demand is rising accordingly. Because investors are looking for safe investments in these uncertain times.

The US Treasury’s recent move to establish a Bitcoin reserve has been met with rave reviews from analysts and experts. As a result, this new development should reduce price swings for UST.

The mechanism

UST is a stablecoin attached to the US dollar through an algorithm. Unlike other centralized cryptocurrencies, it is not backed by anything other than Luuna (the company behind it). If the prices fall off their pin and fall below $1 per token, UST can be traded for LUNA (which is minted). And can be sold for $1, bringing arbitrage profits to investors. The opposite happens when demand increases; burning more luna means higher prices because less general supply comes into circulation.

Luna tries to break his $77.17 break | Source: LUNA/USD Chart on Tradingview.com

Terra’s introduction of a Bitcoin reserve can be seen as the next major step in reducing volatility within its ecosystem. This is because it reduces the correlation between UST and bitcoin. This means that if traders want to trade their coins for different assets, they will have plenty available with this new addition.

Is it worth buying LUNA now?

The price of LUNA has been on an upward trend lately and traded at $74.34 on February 26, 2022. The coin rose 13% in 24 hours.

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LUNA is currently trading just below the weekly support level of $77.17, showing a strong upward trend since Feb. 24. So stay tuned – it may be time to buy more stocks before they climb higher in future updates.

If you want to invest in crypto, buying volumes are increasing, and Luuna is a good bet. The altcoin has pushed through recent resistance levels with ease. It could even test prices above $90 before the end of February.

With LUNA currently trading in a strong uptrend, the crypto is not too late to turn bearish. If this happens, investors should look for support below $65, which could mean an emerging downtrend is imminent.

Featured image from Flickr, chart from TradingView.com

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