Terra Classic (LUNC) rose 17.64% in the last 24 hours, extending its 7-day rally to 118.18%. This increase coincides with a significant vote for the network upgrade, an increase in token burning, and the anticipation surrounding Do Kwon's legal processes.
Approval of the network upgrade – 99.34% of voters supported the upgrade v3.6.1, which increased confidence.
Binance Operational Support – The exchange paused deposits and withdrawals during the upgrade, indicating stability.
Acceleration in token burning – 1.57 billion LUNC were burned last week, reinforcing the scarcity narrative.
Technical breakout – The price surpassed key resistance levels, triggering momentum-driven buying.
Detailed analysis
1. Network update and Binance support (Positive impact)
Summary:
The Terra Classic community began voting on update v3.6.1 on December 9, aiming to improve blockchain security, interoperability, and CosmWasm capabilities. Validators like BiNodes and Hexxagon supported the proposal, reaching 99.34% approval by the time of the report. Binance paused LUNC transactions during the update, reinforcing institutional confidence.
What this means:
Updates are often related to temporary increases in the price of LUNC, as they indicate progress towards ecosystem recovery. Binance's involvement reduces operational risks, attracting traders looking for stability in times of high volatility.
Key point to follow:
Block height 26,479,000 (estimated for December 18), when the update will be executed.
2. Token burns and supply dynamics (Mixed impact)
Summary:
Developers and exchanges burned 1.57 billion LUNC last week, raising the total burned to 428 billion. Only Binance destroyed 75.89 billion LUNC through its monthly fee burn mechanism.
What this means:
Although burns reduce the total supply (6.47 trillion), their impact is diluted due to the enormous amount of tokens in circulation (5.49 trillion). These burns act more as a psychological incentive that drives retail speculation, rather than significantly changing the token's economics.
3. Technical breakout and changes in leverage (Positive but with risks)
Summary:
LUNC surpassed its 50-day exponential moving average (EMA) ($0.0000587) and its 200-day EMA ($0.0000528), with an RSI of 68.09 (neutral-positive). However, open interest (OI) fell by 77% to $5.46 million, indicating that traders are closing leveraged positions.
What this means:
The price increase appears to be primarily driven by direct purchases, without sustained leverage. While this is positive in the short term, low open interest increases the risk of quick sales to take profits. A close above $0.000068 (0.786 Fibonacci level) could extend the gains.
Conclusion
The LUNC rally reflects a combination of technical momentum, optimism about the update, and speculative burns. However, the drop in open interest and the large number of tokens in circulation limit the upside potential. Key attention: network stability after the update and the Do Kwon ruling on December 11 — a possible 'sell the news' scenario could generate volatility.
