scorecardresearch
Terra Luna up 100% during weekend; here's why

Terra Luna up 100% during weekend; here's why

The cryptocurrency by Terraform Labs had wiped out erasing billions of dollars of investors in the month of May 

The cryptocurrency by Terraform Labs had wiped out erasing billions of dollars of investors in the month of May  The cryptocurrency by Terraform Labs had wiped out erasing billions of dollars of investors in the month of May 

Terra Luna, the volatile cryptocurrency by Terraform Labs witnessed a 100 per cent pump over the weekend. 

Interestingly, Terra Luna had wiped out 100 per cent earlier this month after the stablecoin TerraUSD de-pegging fiasco, wiping off billions of dollars of investors' wealth and bringing stablecoins under regulatory scrutiny. 

The token surged 100 per cent over the weekend and is still up 60 per cent on Monday, as per data from CoinMarketCap at 9:00 am IST. 

So, what might have caused this rapid pump in the value of the token? Some possible reasons are listed below: 

Burning of the token 

As a part of the plan to revive the Terra ecosystem, Do Kwon had proposed to burn the Terra Luna token and cap the supply at 1 billion. Burning cryptocurrency is the process of removing crypto tokens from circulation. This reduces the total number of tokens of the cryptocurrency in circulation. The tokens are delivered to a wallet address that may only be used to receive the crypto and for no other purpose. The wallet is disconnected from the network, rendering the tokens useless. 

Terra Luna shorting becomes difficult 

The increase in the value of Terra Luna can be attributable to the difficulty traders are facing in shorting the asset. Majority of crypto exchanges have suspended margin trading of th Terra Luna token which has led to the inability of shorting the token. 

Shorting in trading is the process of borrowing an asset and selling it at a high price and then buying it at a low price and returning it. The difference is the profit the trader earns. 

Hard fork of Terra network 

Do Kwon, the founder of Terraform Labs, had proposed that the Terra network be hard forked, and the Terra Luna token be transferred to the new chain.  

This proposal was received positively by the community with over 80 per cent of users in favor of the ‘Hard fork.’ This could be one of the reasons why the token pumped over the weekend. 

Also Read: Is Musk target of Left's political conspiracy? He think so - BusinessToday

Also Read: Crypto markets on path to recovery ; Bitcoin, Ether, Solana all up - BusinessToday