Terra Luna Classic price has bounced back slightly after crashing to a key support level this month. After hitting the key support at $0.00005650 on March 11, the token has risen to $0.000065 as the burn rate has remained high. So, is it safe to buy the LUNC price dip?
Terra Luna Classic token burns have risen
One potential catalyst for the LUNC price is that the LUNC token burn has continued to grow this month.
Data shows that over 175 million LUNC tokens have been incinerated in the last seven days. These burns have brought the cumulative LUNC burns to over 406 billion tokens since 2022. They have reduced the number of coins in circulation to about 6.49 trillion.
A token burn is an essential metric in the crypto industry because it helps to promote deflation. It is the opposite of a token unlock, a situation where a crypto project emits new tokens, diluting existing holders.
Terra Classic has been burning its tokens since its inception in May 2022. Most of these burns came from Terraform Labs, which was forced to burn billions of coins as part of its bankruptcy process.
Other burns have come from individuals and organizations that believe in Terra’s mission. The most notable of these is Binance, which has burned over 70 billion LUNC tokens in the past few years.
Terra Luna Classic tokens are also burned from the network fees. However, these fees are negligible for now and don’t contribute much.
Read more: LUNC price crash: why Terra Luna Classic is sending mixed signals
Key ecosystem challenges
One reason why the LUNC price has crashed is that the Terra Luna Classic’s ecosystem growth has been limited. Data shows that, while there are tens of dApps in its network, the total value locked (TVL) has dropped to $801,000. This is a tiny amount considering that the DeFi industry has almost $100 billion in assets.
The biggest dApps in the Terra Classic ecosystem are Terraswap, Loop Finance, Eris Protocol, and Edge Protocol.
More data shows that the network has just $524,000 in stablecoins, a tiny amount since there are over $238 billion in stablecoins in circulation. Tether, USD Coin, and USDS control the industry with billions of assets.
Further, there are signs that the number of core developers on Terra Classic has deteriorated over the years. It had 60 core developers at its peak, a figure that has moved down to 9. As a result, the number of commits has continued moving downwards.
Read more: Terra Luna Classic proposal seeks developer compensation for key ecosystem work
LUNC price technical analysis
The weekly chart shows that the Terra Luna Classic price has been in a strong downtrend in the past few years. It has dropped to a low of $0.000054, a key price where it failed to move below since 2023.
This price is also the lower side of the descending triangle pattern, a popular bearish continuation sign. It has remained below the 50-week moving average, a sign that bears are in control.
LUNC price has two possible scenarios. First, the descending triangle can work out well, leading to more downside, potentially to the support at $0.000050.
Second, on the other hand, the ongoing consolidation could be part of the accumulation phase. If this is the case, it means that the LUNC price will ultimately surge as it enters the markup phase of the Wyckoff Theory.
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