Terra has plunged in the past 24 hours amid growing macroeconomic uncertainty. Despite the Luna Foundation Guard’s announcement to buy $1.5 billion in Bitcoin, LUNA has suffered during the recent market downturn. If LUNA breaks the $77.70 support, it could suffer a brutal breakdown.
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Terra’s LUNA is approaching a key support level that could define its future price action. LUNA is at risk of a sharp decline as the macroeconomic outlook deteriorates.
Terra’s LUNA at Vital Support
Terra faces the risk of an economic downturn as market participants worry about the global economic outlook.
The layer 1 blockchain’s LUNA token has retraced more than 10% over the past 24 hours, from a high of $87.80 to a low of $78.80. The bearish impulse started on Thursday after the Bank of England raised UK interest rates to 1% from 0.75% and forecast inflation to hit 10% by the end of the year. On the same day, the Luna Foundation Guard made its largest bitcoin purchase to date, adding 37,683 bitcoin to its reserve fund.
The nonprofit announced that it had purchased more bitcoins with the help of Genesis Trading and Three Arrows Capital, bringing its total reserves to about 80,394 bitcoins. In the past, Terra-linked foundation purchases of Bitcoin have injected confidence into the market and helped LUNA soar to new highs. However, LUNA failed to react to the latest update amid a gloomy macroeconomic outlook.
From a technical standpoint, the coin appears to be in trouble. It recently formed a head-and-shoulders pattern on its daily chart, and a bullish-to-bearish trend reversal is expected. A sustained close below the pattern’s neckline at $77.70 could lead to a 35% correction that could take prices below $50.
Due to current market conditions, LUNA is at risk despite LFG’s ongoing bitcoin spending binge.
Nonetheless, the bearish outlook could be invalidated if the bulls succeed in pushing the price above the $94 resistance. Breaking through this important supply barrier could encourage marginalized investors to re-enter the market, which could help the coin regain its previous all-time highs. LUNA reached $119.18 on April 5. It has since fallen around 32.8% and is trading just above $80 at press time.
Disclosure: At the time of writing, the author of this article owns BTC and ETH.
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