Home Correction trading Why You Should Be Careful Trading Terra’s LUNA 2.0 Price

Why You Should Be Careful Trading Terra’s LUNA 2.0 Price

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  • Terra’s price drops massively as external pressures increase on its price action.
  • LUNA price is expected to drop towards $2.00 in a quick correction.
  • Expect a possible full pairing towards pennies, as the question remains what to do with stablecoins in the future.

Terra (LUNA) price action is poised for a massive correction after the rules of the game changed Thursday after the ECB massively dropped the ball. The fallout from this miscommunication from the central bank has triggered a massive move in the dollar that will not only weigh on the LUNA/USD spot price, but also put the screw on Terra maintaining its peg against the dollar. With several headlines Thursday out of Congress with questions about a regulatory crackdown on stablecoins, the last days of this second release for LUNA seem to be numbered.

Last Trading Days LUNA Price Countdown

Terra’s price might suffer a bit as two significant external factors could cause a massive headwind, or rather even a massive hurricane, for that matter. On Thursday, the ECB dropped the ball by committing to the smallest rate hike in global markets, while other major central banks are committing to longer, wider and faster rate hikes for controlling inflation. The most significant side effect of this mishap was that the euro collapsed massively and in turn made the dollar more expensive across the board.

LUNA’s price has yet to reassess its own intrinsic value against this stronger dollar, and there is still the problem of its peg to the strong dollar, which will force Terra’s hand to buy more assets to support this attachment, and which can prove difficult with shares that are losing value. As more headlines emerge regarding the regulatory crackdown, LUNA’s price looks set to bow to pressure and is set to fall back to $2.00, a 35% drop. If the dollar strengthens further and hits new lows, expect to see further decline towards perhaps just pennies as investors turn their backs on the stablecoin for good.

LUNA/USD 4H-chart

A jump up, towards $3.80 or $4.00, on the other hand, could occur if, later this afternoon, the US inflation figures surprise on the downside. This would mean that the FED has inflation under control and less severe action is needed. This would in turn trigger a jump in stocks, creating a double tailwind for the price of LUNA with both stock risk and dollar weakness as the driving forces. A rally to $6.00 could be possible, but markets should then rise in price.