Terra Luna Classic (LUNC) has plunged to its lowest level since 2022, erasing much of its previous gains. The token has dropped to $0.00004745, shedding 65% of its value from its November high. Despite aggressive token burns aimed at reducing supply, investor sentiment remains deeply bearish.
Massive Token Burns Fail to Revive LUNC’s Value
Over 1.59 trillion LUNC tokens were burned in just the last week, bringing the total burned since inception to 402.17 billion. While this should theoretically create a supply shock and support price growth, the market has reacted differently.
A major contributor to the burns has been Terraform Labs, which has incinerated billions of tokens. Binance, the world’s largest crypto exchange, has also participated in the effort. Even with these burns, the circulating supply still stands at around 5.5 trillion coins—down from over 6 trillion but still far from a meaningful reduction in overall liquidity.
The concept of token burns boosting prices works when demand remains stable or increases. However, LUNC’s case suggests that broader market trends and investor sentiment overshadow supply reductions.
Investors Are Selling Despite Staking and Burns
On-chain data reveals that investors are offloading their LUNC holdings. The number of staked tokens now sits at 985.7 billion, which represents 15.15% of the circulating supply. A few weeks ago, this figure was at 15.32%, signaling a decrease in long-term holders willing to lock up their tokens.
This suggests that confidence in LUNC’s recovery is waning. Investors are prioritizing liquidity, moving their funds to alternative assets instead of holding onto a declining token.
One critical factor affecting LUNC’s price action is the lack of fresh demand. While some traders are still betting on a rebound, the overall market sentiment suggests that new buyers are not entering the ecosystem in significant numbers.
Technical Analysis: Breaking Key Support Levels
LUNC’s price chart paints a concerning picture. The token has remained below a key descending trendline, a sign that bearish momentum is still in play. The 50-week moving average has also been breached, reinforcing the likelihood of further losses.
A descending triangle pattern has formed, with LUNC now hovering near its lower boundary. If this pattern completes, the price could fall further toward its all-time low of $0.00003555.
There are only two scenarios that could break this trend:
- A strong bullish breakout above the descending triangle’s upper resistance. This would require significant buying pressure, which seems unlikely given current trends.
- A new fundamental catalyst or major market event. Without fresh demand or an external boost, LUNC’s path remains bearish.
LUNC’s Future Hinges on Broader Market Sentiment
Despite aggressive burns and staking, LUNC remains vulnerable to broader crypto market conditions. The token’s inability to capitalize on its reduced supply reflects a deeper issue: weak demand and fading investor confidence.
Unless something shifts dramatically—whether it’s a market-wide recovery or a game-changing development in the Terra ecosystem—LUNC may continue struggling in the weeks ahead.
