Amid Bitcoin's collapse, another cryptocurrency displaced Dogecoin and made its place among the top 10 in the world
Amid Bitcoin's collapse, another cryptocurrency displaced Dogecoin and made its place among the top 10 in the world
While the crypto market is amid a steep decline and Bitcoin fell almost 30 percent, the cryptocurrency Terra gained ground against the trend and managed to position itself in the top 10 of the most significant market value.
On November 25, Terra had a market value of USD 16 billion. A few days later, on December 3, it was already around $29 billion. Although it suffered a correction to USD 25 billion, it remains in the world's ranking of the largest cryptocurrencies.
Terra is a blockchain project that seeks to create a whole ecosystem focused on generating decentralized finance applications (defi) on a high-speed blockchain and the facility to develop stable cryptocurrencies or "stablecoins". This type of cryptocurrency anchors its price to other assets, usually the dollar. That means that buying a stablecoin is equivalent in terms of value to buy 1 US dollar.
Its price growth not only surprised the market with the rise itself, but it also managed to displace the largest meme-based cryptocurrency, Dogecoin, Elon Musk's clear favorite. DOGE remained in the top 10 cryptocurrencies for several months but is currently eleventh, holding $2 billion below Terra's market value.
At the beginning of the year, Terra's LUNA token was priced at $0.65. Today it trades for $63 per unit. The change implies a rise of more than 10 thousand percent so far this year.
The company that owns the Terra cryptocurrency, Terraform Labs, was founded in 2018 by South Koreans Do Kwon and Daniel Shin, based in Singapore. In July of 2021, Kown, CEO of Terraform Labs, said in an interview with Forbes, "Luna directly benefits from the economic growth of Terra's economy and suffers from the contractions of Terra's currency."
At the end of September, an update to the Terra protocol was implemented. The goal was to help keep UST, a terra token, tied to Terra's fiat value. This resulted in around 100 million LUNA tokens burned in the following months, which reduced the number of coins on the market and began the rise in value because of this reduction in supply. As a result, UST, the Terra-based stablecoin, became the third-largest cryptocurrency in the market by overtaking DAI, another stable coin based on a decentralized finance protocol.
Yanina Orrego, CEO of Capital editions, told Infobae: "When the update called Columbus-5 was implemented, it started burning LUNA tokens massively. Added to this is how well the Terraform Labs team is working, which investors value a lot, and therefore give their support by buying more tokens. The rise of Terra's token was triggered by a good performance of the team, creating more and more value over the months. The work they have been doing is currently being reflected in the prices."
This was mainly reflected the day before yesterday, Saturday, December 4. On that day, the cryptocurrency market went on to lose more than $500 billion in value, falling more than 20 percent, from $2.44 trillion to $1.88. However, in the same period, LUNA gained 18 percent in value, rising from $63 per unit to $75, bringing it to $28 billion in total valuation.
Franco Capelo, CEO of the Institute for Technical Analysis, told Infobae: "LUNA seems to be at support, which means that, after a strong correction, it could shoot back to the upside. But, unfortunately, it is very likely that if the price of Bitcoin continues to fall, sooner or later, it will drag LUNA down. This means that, while its price could continue to rise, it needs to be accompanied by the rest of the crypto market. Otherwise, the correction may become even bigger and continue to fall."