TerraLuna Classic (LUNC) gained over 78% on Monday following an announcement by Binance that it would support the blockchain’s burn mechanism. The recovery has seen the LUNC price break out of a significant bearish chart pattern.
Binance To Implement Luna Classic Burn Mechanism
LUNC climbed 78.13% from Sunday lows around $0.00018 to trade at $0.0003289 on Monday after Binance, the largest crypto exchange in the world announced that it would implement the token’s burn mechanism. The announcement that appeared on the exchange’s official website stated:
“Binance will implement a burn mechanism to burn all trading fees on LUNC spot and margin trading pairs by sending them to the LUNC burn address. The amount of LUNC to be burned, its equivalent value in USDT and on-chain transaction ID will be updated weekly in this announcement until further notice.”
Binance said it would implement the trading fee burn mechanism while “maintaining a good trading experience for users.” In the announcement, Binance stated that the exact amount to be burned would be updated weekly.
Token “burning” means destroying a certain number of the given crypto by taking it out of circulation to stabilize the token’s price, ultimately raising its value.
Binance revealed that the trading fees on LUNC spot and margin trading pairs would be collected in USDT, BUSD, and BNB. Then, they will be converted to LUNC at real-time exchange rates to be deposited to the said address.
According to Binance, the decision to burn all trading fees on LUNC spot and margin trading pairs was in response to a proposal by the LUNC community. The proposal to burn 1.2% of every LUNC transaction on the network came into effect on September 21. Approximately 6.1 billion LUNC tokens have been burned since then.
Since crypto trading on Binance attracts low transaction fees, some market participants think that the latest move by the crypto firm will have little or no effect on LUNC’s price in the long term. Binance users have the option of taking up the 1.2% burning mechanism.
LUNC Price Breaks Out Of A Descending Channel
Monday’s rally saw the LUNA classic price flip the 50-day simple moving average (SMA) at $0.0002197 and the upper boundary of the descending parallel channel at $0.000221 back to support, suggesting an upward breakout.
Despite this display of strength by LUNC, its price remains far below LUNA’s all-time high of around $120 in April, when it booked a spot amongst the top 10 cryptocurrencies by market capitalization. This was before the TerraUSD/LUNA debacle occasioned by the depegging of UST from its dollar peg, leading to the collapse of the multi-billion Terra ecosystem in May.
LUNC was trading at $0.00028 at the time of writing and appeared to be fighting resistance from the $0.00030 psychological level. Note that a daily candlestick above this level could see the price of the token rise first toward $0.00040 and then to the $0.00050 level. Above that, an ascent to the September 8 high around $0.00059 would be the next logical move. This would represent a 108% upward move from the current price.
On the downside, LUNC traded in red on Tuesday, and the relative strength index (RSI) was moving away from the positive region. This suggested Mondays had run out of steam as sellers sold on the rally to $0.00030.
As such, if TerraLUNA Classic turns down from the current levels, it would drop toward the upper boundary of the prevailing chart pattern at $0.00021. More losses could see the price drop back into the descending channel, pointing to a further decline toward the middle boundary at $0.000131. In highly bearish scenarios, LUNC may drop to seek solace from the lower limit of the falling channel at $0.000045.
Despite these positive developments and the strength displayed by the price action, it is worth mentioning that the co-founder of Terra Do Kwon is still on the run from South Korean authorities, who have labeled him a “fugitive,” and Interpol has filed a “Red Notice” for his arrest.