LUNA price is far from its all-time high but three key metrics signal that the altcoin could be preparing to rally. Terra (LUNA) price lost 31% over the past four weeks, erasing all of the gains accrued year-to-date and even though the token continues to outperform the broader cryptocurrency market by 20%, Terra is struggling to hold above the $85 support.
Previously, a few bullish catalysts were Terra’s USD (UST) stablecoin flipping Binance USD (BUSD) to become the third-largest stablecoin on April 18 and the April 26 announcement that Fireblocks, a digital asset custody platform had seen institutional clients invest over $250 million into the Terra decentralized finance (DeFi) ecosystem.
This positive newsflow was not enough to instill confidence in Terra investors and there were also a few changes that might have partially subdued the continuous inflow of deposits on the network. For instance, on May 1, Anchor Protocol, Terra’s largest DeFi application by deposits, introduced a semi-dynamic adjustment to its previously fixed 20% annualized percentage yield (APY). The Anchor earn rate was cut to 18% and going forward it will be reviewed monthly.
Terra's main decentralized application metric increased by 41% over the past month as the network's total value locked (TVL) hit an all-time high at 254 million LUNA. Notice how Terra's DApp deposits saw a 77% jump in 2022, reaching the equivalent of $21.2 billion. As a comparison, Binance Chain's TVL currently stands at $9.8 billion, a 9% increase in BNB terms year-to-date. Avalanche, another DApp scaling solution competitor, saw a 28% TVL increase in AVAX terms to a $7.9 billion value.
To confirm whether DApp use has effectively increased, investors should also analyze the transaction count within the ecosystem. Anchor holds a $16.6 billion TVL, equivalent to 78% of Terra’s decentralized application deposits. The protocol averaged 70,150 transactions per day last week, which is 15% below the levels seen in early April.
Astroport, an automated market-making project, holds the number two position in TVL terms within Terra’s ecosystem, with $1.6 billion worth of deposits. Notably, last week, an average of 50,650 transactions per day took place, a 30% decline from the previous month. According to Terrascope data, the Terraswap decentralized asset liquidity application had 31,400 average daily transactions over the past week. The number is similar to the levels seen in early April.
The reduced use of Terra DApps does not seem to have impacted derivatives traders' appetite. The above chart shows LUNA futures contracts open interest holding steady at $706 million. This data is critical because a smaller number of futures contracts could limit arbitrage desks and institutional investors’ activity.
Furthermore, Terra has the third-largest open interest behind Bitcoin (BTC) and Ether (ETH). As a comparison, Solana (SOL) and XRP futures contracts hold a $660 million open interest.
Even though it seems impossible to pinpoint the cause of LUNA's price drop, the decrease in the network's decentralized apps use can partially explain the movement. However, the increase in its smart contract deposits, as shown by the TVL increase and sound interest from derivatives traders point to a price recovery in the near-term.
The data suggests that Terra holders are not concerned about the 31% price correction and are more focused on the ecosystem's growth versus its competitors. As long as these metrics remain healthy, investors are not likely to sell at a loss.
# | Crypto | Prediction | Accuracy | CVIX | Price | 24h | 7d | Market Cap | 7d price change | |
1 | ![]() |
Bitcoin predictions | 90.8% | 9 | $27 072.74 | -0.31% | -0.57% | $524 998 864 858 | ||
---|---|---|---|---|---|---|---|---|---|---|
2 | ![]() |
Ethereum predictions | 90% | 5 | $1 894.87 | -0.29% | 2.21% | $227 827 686 185 | ||
3 | ![]() |
Tether predictions | 95.6% | 1 | $1.000237 | -0.01% | -0.01% | $83 172 174 121 | ||
4 | ![]() |
Binance Coin predictions | 91.2% | 3 | $306.06 | -0.12% | -0.96% | $47 701 185 151 | ||
5 | ![]() |
USD Coin predictions | 96% | 1 | $0.999884 | -0.01% | -0.02% | $28 901 071 500 | ||
6 | ![]() |
XRP predictions | 74.4% | 45 | $0.522198 | -0.25% | 10.27% | $27 147 495 980 | ||
7 | ![]() |
Cardano predictions | 90% | 5 | $0.378860 | 0.52% | 1.56% | $13 220 010 862 | ||
8 | ![]() |
Lido stETH predictions | 96% | 1 | $2 941.39 | -0.40% | -3.32% | $10 258 752 564 | ||
9 | ![]() |
Dogecoin predictions | 90% | 10 | $0.072655 | 0.32% | -0.38% | $10 144 189 079 | ||
10 | ![]() |
Solana predictions | 83.6% | 26 | $21.27 | 0.60% | 3.64% | $8 443 365 511 | ||
11 | ![]() |
Polygon predictions | 85.6% | 24 | $0.903134 | 0.55% | -2.81% | $8 380 602 516 | ||
12 | ![]() |
Wrapped TRON predictions | 74.8% | 41 | $0.081699 | -2.02% | 5.66% | $8 306 858 508 | ||
13 | ![]() |
TRON predictions | 78.4% | 46 | $0.081792 | -2.14% | 5.52% | $7 377 081 997 | ||
14 | ![]() |
Litecoin predictions | 76.4% | 43 | $95.39 | 0.78% | 5.98% | $6 970 331 292 | ||
15 | ![]() |
Polkadot predictions | 92.4% | 7 | $5.34 | 1.40% | -0.79% | $6 358 029 850 |
Get cryptocurrency price predictions, forecasts with analysis and news right to your inbox.
© 2015-2023 Crypto-Rating.com
The usage of this website constitutes acceptance of the following legal information. Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website, including information about the cryptocurrencies and bitcoin is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Crypto Rating shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about cryptocurrencies. The entire responsibility for the contents rests with the authors. Reprint of the materials is available only with the permission of the editorial staff.