After the Bitcoin crash on Black Friday, the entire market seemed to turn red, save for a few altcoins like the Crypto.com coin and, surprisingly, Terra (LUNA). In fact, LUNA was one of the few alts in the top 20 to see over 5% daily and 8% weekly gains.
Layer 1 protocols such as Avalanche (AVAX) and Terra (LUNA) have achieved high returns since the beginning of the year. LUNA’s annual ROI versus USD at the time of writing was an incredible + 11749.61%. The 14th altcoin, however, has been closely following BTC’s price movement since November 16, after which it posted almost 25% losses.
LUNA is coming back?
LUNA’s share price hit lower lows after falling on November 16, although AVAX’s share price gained momentum shortly thereafter. It seemed like LUNA was harder hit by the larger market decline and followed the price of Bitcoin. In fact, the RSI has also been in a bearish trend since November 9th.
Source: TradingView
However, since November 26th, LUNA has seen modest gains as the RSI broke out of the downtrend it had throughout November. At the time of writing, alt had broken above the critical $ 45.56 mark which was a major drag for LUNA.
Aside from the recent price declines, LUNA’s macro uptrend remains intact. In fact, after Terra’s Columbus 5 upgrade, LUNA’s price has maintained a decent development and has evolved independently of the market.
TerraUSD, Terra’s native stablecoin backed by LUNA, also saw its market capitalization grow last month. Market capitalization jumped from under $ 3 billion on Nov. 10 to $ 7.17 billion at the time of publication.
Source: Messari
Something is missing here
After hitting the $ 10 billion mark, Terra’s TVL began to decline last week, falling to $ 9.39 billion, 6% less than last week. This drop in its TVL could be an indication of declining institutional interest as the price of the old closely followed the price of BTC.
Source: Coin98Analytics
Additionally, the lack of retail FOMO on Terra’s rally appeared to be a worrying trend. In particular, trading volumes have been quite low and there has been a macroeconomic downward trend in trading volumes since October.
Nonetheless, the old’s price finally seemed to break away from the downtrend as its funding rate rose. In fact, open interest in the perpetuals market has seen a nearly 4% increase.
A lack of institutional and private interest in Alt could be a reason for the price decline, aside from the positive BTC correlation that Alt appeared to be breaking at the time of writing. As the price trend for LUNA gains momentum, a switch from the retail side can push the crypto to new ATHs.
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