The digital asset of Terra (LUNA) has dropped by almost 10% in the last 24 hours
This is despite the bullish news of the Luna Foundation Guard buying $1.5 billion worth of Bitcoin
However, the drop is understandable given Bitcoin has lost its $38k amidst anxiety over the US Fed increasing interest rates by 50 basis points
LUNA/USDT risks losing the 200-day moving average ushering in a bear market for the digital asset
The digital asset of Terra (LUNA) has been hard hit by the ongoing crypto market correction that has seen Bitcoin lose the critical $38k support level. According to the team at WuBlockchain, Terra (LUNA) is down 9.6% in the last 24 hours despite the bullish news of the Luna Foundation Guard buying $1.5 billion worth of Bitcoin to add to its UST reserves.
Terra is down 9.6% in the last 24 hours, the No. 1 decline among the top 100 cryptocurrencies. CNBC just revealed that the Luna Foundation Guard bought $1.5 billion in Bitcoin as a reserve this week.
A glance at Coinmarketcap.com confirms that Terra (LUNA) has lost almost 10% in value in the last 24-hours and 12.66% in the last seven days. This, in turn, means that majority of LUNA’s losses have been experienced in the last day alone.
LUNA’s Woes are Linked to Bitcoin Losing $38k and the US Fed Increasing Interest Rates
From a technical analysis point of view, Terra’s (LUNA) woes in the crypto markets can be attributed to Bitcoin losing the $38k on Thursday as news broke that the US Fed would increase interest rates by 50 basis points. Furthermore, the US Fed is scheduled to start the process of Quantitative Tightening as soon as June 1st.
Quantitative tightening is when a central bank reduces the financial assets it holds on its balance sheet. It does this by ‘letting the bonds it’s purchased reach maturity and run off its balance sheet’, thus ‘effectively [creating] the money it used to buy the bonds out of thin air.’
What the LUNA/USDT Daily Chart Says
Concerning price action, the daily LUNA/USDT chart shows that the digital asset has found support at the crucial 200-day moving average (green) around the local low of $72.08 set earlier today.
At the time of writing, LUN/USDT is trading at $73.57. A break of the support mentioned above could lead to more losses. LUNA’s daily MFI is in neutral territory of 40, and its RSI is in oversold territory of 30. However, its daily MACD points towards additionally selling as the crypto markets head towards the weekly close.
Consequently, caution is advised when going long on Terra (LUNA) as the low weekend trade volume could usher in more selling resulting in the loss of the 200-day MA. Such a scenario would signal the official beginning of a bear market for Terra (LUNA).