LUNA Loses Classic Shine: -7% Plunge Follows Terraform’s Chapter 11 Filing

The Terra (LUNA) price has plummeted by over 7% following the recent news of Terraform Labs, the company behind the TerraUSD (UST) stablecoin, filing for Chapter 11 bankruptcy. This move, announced on January 21 in a Delaware court, marks a pivotal moment for the Singapore-based company, co-founded by Do Kwon.

Terraform Labs Seeks Bankruptcy Protection

Amid ongoing legal challenges, including a lawsuit against the U.S. Securities and Exchange Commission, Terraform Labs has sought refuge under Chapter 11 bankruptcy, as reported by Coin Edition. Do Kwon remains the majority shareholder, owning 92% of Terraform Labs, while South Korean entrepreneur Daniel Shin holds the remaining shares.

The news of Terraform Labs’ bankruptcy has sent ripples through the Terra ecosystem. Consequently, the Terra (LUNA) token, already struggling in the market, saw a further 7% decrease in value, falling from an intra-day high of $0.6662 to an intra-day low of $0.61. At press time, LUNA exchanged hands at $0.6209, a 6.28% decline from the 24-hour high.

In addition, LUNA’s market capitalization fell 6.16% to $395,792,889, reflecting the general gloomy mood. However, the 24-hour trading volume climbed by 53.05% to $45,133,733, demonstrating more activity and interest in the LUNA token despite its dropping value. This increase in trading volume indicates that some investors may view the present slump as a chance to purchase LUNA at a lower price, potentially contributing to a rebound.

Similarly, Terra Luna Classic (LUNC) experienced a decline, dropping to $0.000102. The trading volume of LUNC has seen a 1% decrease, adding to the market’s uncertainty.

LUNA/USD Technical Analysis

The stochastic RSI trend on the LUNAUSD price chart in the oversold region, with a reading of 8.60 and moving upwards, suggests that there may be a potential reversal or bounce in the price of LUNAUSD. Consequently, traders and investors could interpret this as a signal to consider buying or accumulating LUNAUSD at these levels, anticipating a possible upward movement soon. The increasing trading volume also supports the possibility of a price reversal, indicating growing interest and activity in trading LUNAUSD.

The Relative Strength Index (RSI) rating of 25.52 and moving upwards also support the potential for a price reversal in LUNAUSD. If the RSI crosses above its oversold level of 30, it could signal a shift in momentum towards buying pressure and potentially lead to an upward movement in the price of LUNAUSD. Additionally, the increasing RSI suggests that the cryptocurrency may be entering a more bullish phase, attracting more investors and driving up its price further.

LUNA/USD 4-hour price chart (source: TradingView)

In addition, the Chaikin Money Flow (CMF) rating of -0.08s and moving upwards also indicates a potential buying opportunity for LUNAUSD. The positive CMF suggests an inflow of money, further reinforcing the likelihood of a price reversal. If the CMF continues to rise, it could be a strong indication of increasing buying pressure and potential further upward movement in the price of the LUNAUSD.

Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.

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