Zombies aren’t real, but some deadcoins can claw their way back from the grave.
That seems to be the lesson we’re seeing right now, as the original Terra LUNA, yes, the coin whose death spiral this year was ground zero for the epic bloodbath that followed in the crypto markets, has rallied some 340% in the past few weeks.
The moonshot has brought what is now called LUNA Classic (LUNC)’s market cap soaring well past the US$1bn mark for the first time since crashing in May, breaching $US3.5bn at the time of writing.
As it stands, LUNC is now the 23rd largest cryptocurrency on the charts and is the top-trending digital asset on CoinMarketCap.
Against the odds, LUNC heads skyward, adding a few hundred percent in two weeks – Source: binance.com
How about a quick recap to see how we got here in the first place…
Quick history lesson
- Terra LUNA and sister stablecoin UST see one of the bloodiest crashes in cryptocurrency history in May, as UST loses its dollar peg, crashing to zero
- LUNA – which was used as an arbitrage device to maintain UST’s dollar peg – drops from a market capitalisation of US$30bn to US$500mln in a matter of days, effectively wiping 99% off its valuation and causing billions upon billions in losses for holders
- Terraform Labs founder Do Kwon becomes the most hated man in crypto… until Alex Mashinsky’s Celsius Network crashes a few weeks later
- Not content with failure, Terraform Labs relaunches LUNA v2 on May 27, while the old LUNA gets rebranded as LUNA Classic (LUNC)
- Despite the billions lost among LUNA investors, Terraform Labs seemingly carries on as normal with its LUNA v2 token, while a community rallies around LUNA Classic (LUNC)
- LUNC starts trending at the end of August and within two weeks increases its market cap by over 340%.
- Meanwhile, Do Kwon’s LUNA v2 still struggles to take off after crashing in price the day after launching
In all honesty, LUNC never really achieved deadcoin status post-crash.
When the entire Terraform Labs ecosystem crashed and burned, Do Kwon and crew may have been happy to cut their losses and run, but the individual investors who were left with worthless stacks of LUNA coins held onto hope.
An aggressive buying strategy was promoted online to keep bullish pressure on the coin, which seems to have kicked into overdrive in recent days.
The community recently passed a proposal to ‘burn’ LUNC tokens each time a transaction is processed.
Burning refers to removing tokens from circulation; think of it as crypto’s form of quantitative tightening.
In LUNC’s case, each on-chain transaction will have a 1.2% tax applied to it, which will go towards buying LUNC tokens from the market and subsequently burning them, thus reducing supply.
The goal is to bring circulation down to 10 billion (current supply is over six trillion).
But it’s not just the #LUNCcommunity showing up in support of the token; a number of major exchanges are also throwing their weight behind it.
The world’s largest digital asset exchange Binance has signalled support for the new burning mechanism (although only on deposits and withdrawals, not spot trading transactions), as have smaller but still sizeable exchanges KuCoin and Gate.io.
Trading volumes on Binance are currently going through the roof, with nearly US$1.9bn in volumes witnessed in the past 24 hours.
LUNC holders are also receiving free LUNA v2 tokens via an airdrop, which may be contributing to buying action.
Word of warning
LUNC has a long time before regaining its prior market value, if it ever manages to.
Circulating supply is massively diluted and each token is worth a measly $0.0005.
Short squeeze campaigns such as what we’re seeing with LUNC and CEL token may offer up some exciting short-term price action, but without genuine utility, there’s a question mark over how long this rally can continue.
At the time of writing, an intraday reversal is beginning to show.
Invest wisely.