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Terra Luna Price Prediction: Can Partnerships and Updates Drive LUNA Recovery?

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Terra Luna
Terra Luna

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Terra Luna (LUNA) remains one of the most criticized cryptocurrencies since the collapse of its sister token TerraUSD (UST) in May last year. Its community members remain committed to rebuilding what is left of the Terra ecosystem and its native token LUNA.

The embattled project still boasts commendable milestones and achievements made in recent months. On May 18, the Terra team took to Twitter listing a number of events that took place on the network during the month of April.

The official Terra (LUNA) handle tweet posted on May 18 gives recent updates on Ecosystem, Governance, Integrations & Listings, Media Features, and Community Thread Highlights.

The update, which was authored by the Head of Communications at Terra Money, Zion Schum, provided an overview of the current situation at Terra. Pointing out the constant battle the community faces with constant FUD from the industry, Schum wrote in a post on Medium:

“It’s not easy to ship cool shit when the entire world tries to FUD you to death, but that’s precisely what the Terra community did in April. From the unveiling of Terra’s cutting-edge new Alliance module to the introduction of Enterprise’s user-friendly, no-code DAO management platform, there’s a lot to unpack in this month’s update.”

Terra’s Alliance – Harnessing the power of incentive alignment

One of the most important updates by Terraform Labs (TFL) was the rollout of an open-source economic tool named Alliance “enabling Cosmos blockchains to trade yield.” The tool allows multiple tokens to be staked on a single blockchain, earning staking rewards. 

With this, Alliance is opening the door for several use cases that enhance “decentralized economies, including attracting users, liquidity, and developers.” It is also aimed at deepening liquidity for essential token pairs, incentivizing native application development, and diversifying or augmenting staking yield. 

Other updates made by TFL include governance milestones including proposals to upgrade Terra Core to v2.3.1 by integrating the Alliance module, provide Lion DAO with a LUNA grant – which passed with 65% “Yes” vote and to fund TerraSpaces with a community grant to continue managing Twitter spaces – this too passed with 69%. 

Other updates included the ruling by South Korea’s Seoul Southern District Court that LUNA (now LUNC) is not a security. 

For a project that has been through a lot since the Spring of 2022, these updates bring hope to the Terra community with traders expecting them to positively impact LUNA’s price.

Unfortunately, Terra LUNA price is down 8.79% since the updates were made public. This reinforces the bearish outlook of the token.

Terra Luna price at risk of 15% more losses

LUNA price dropped below $1 on May 8, a support level that had not been breached for over a year. At the same time, the Terra network’s native token has continuously been suppressed by a stubborn descending trendline for the past five months. 

Note that the price action over the last two weeks has seen LUNA record a series of lower highs and relatively equal lows, leading to the appearance of a descending triangle chart pattern on the daily chart as shown below. 

These technical formations are significantly bearish indicators and feature exact bearish breakout targets that are equal to the thickest part of the triangle.

Bulls unsuccessfully attempted to breach the resistance line of the triangle first on May 17 and again early on Tuesday. Both attempts ended up as mere frustrations as the bulls were not strong enough to break the barrier. 

Consequently, LUNA price continues to recoil inside the descending triangle with the resistance line governing the price lower. 

A break below the horizontal support line (the triangle’s x-axis) at $0.885 would confirm a bearish breakout for the altcoin. This would be the path for Terra Luna’s 15.74%% downward spiral to $0.75

LUNA/USD Daily Chart

Terra Luna Price Chart - May 24
TradingView Chart: LUNA/USD

The same chart also showed there is a significant supplier congestion zone stretching from $1.16 to $1.60, suppressing LUNA price from pushing for an immediate rebound. 

Note that this is where all the Simple Moving Averages (SMAs) sat, suggesting that there are stiff barriers in the token’s recovery path.

Besides, the Relative Strength Index (RSI) showed that the bears’ grip on Terra Luna was firm. This trend-following indicator was positioned at 34 in the oversold region, suggesting that there was still more room to the downside.

On the upside, the RSI displayed oversold conditions for Terra LUNA, implying that a trend reversal was in the offing. In addition, the Moving Average Convergence Divergence (MACD) indicator was facing upwards and had just sent a call to buy LUNA. This happened on May 20 when the MACD line (blue) crossed above the signal line (orange). This showed that the crypto was primed for a recovery. 

Therefore, Terra Luna price could turn up from the current level to produce a daily candlestick close above the triangle’s resistance line trendline at $0.92. This would mean buyers are aggressively defending this level of support provided by the horizontal line of the governing chart pattern at $0.85. 

Such a move would bolster the coin towards the 50-day SMA near $1.16, the 100-day SMA at $0.134, and the 200-day SMA at $1.51. Overcoming this level could see the Terra Luna price rise toward the $1.60 psychological level. 

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