Terra (LUNA) has dominated cryptocurrency headlines over the past two weeks. The token plunged from the top ten crypto assets to outside the top 200 in a matter of days. Can this stablecoin platform ever return to its former glory? Below are the key points:
- Terra experienced a dramatic collapse over the past week
- The token hit an all-time low, though some limited recovery has been observed
- LUNA is currently suffering extreme volatility, swinging as much as 50% in a single day
Source: TradingView
Can Terra ever reach $120 again?
Terra (LUNA) was long regarded as one of the standout projects in crypto. It sat among the top ten assets by market cap and traded above $100 for an extended period. After a sustained downturn in the early part of the year, the token’s price fell to roughly $40.
Those gains were erased more abruptly when UST, the dollar-pegged stablecoin associated with Terra, lost its peg. LUNA subsequently collapsed and is now trading for cents. A full recovery is far from guaranteed. While there have been small rebounds in recent days, LUNA continues to experience significant turbulence.
Moreover, several conditions would need to be met for LUNA to realistically regain substantial value, and many of those conditions are not in place. UST remains unpegged, and the Terra community’s options for shoring up the stablecoin are limited. A return to $10 would be surprising; $120 feels extremely unlikely under current circumstances.
Should you buy the LUNA dip?
LUNA is tradable right now, but it’s not advisable to hold it long term. As noted above, the token is subject to acute volatility, and prices can oscillate wildly within short periods.
That volatility can create opportunities for short-term, speculative traders to realize significant gains. However, from a long-term investment perspective, LUNA is currently too risky for most investors. Only those who understand and accept the possibility of total loss should consider trading it, and any position should be sized conservatively with strict risk management.