- Terra LUNA price has collapsed this week.
- A court in South Korea issued an arrest warrant against Do Kwon.
- A short-squeeze cannot be ruled out in the near term.
Terra LUNA price has come back to earth after going parabolic in the past few weeks. The token crashed to a low of $2.2582, which was the lowest level since September 9. It has crashed by more than 62% from its highest level last week. Similarly, LUNC and other affiliated coins like Mirror’s MIR and Anchor Protocol’s ANC have also crashed.
Why is Terra crashing?
Terra 2.0 is the new blockchain project that Do Kwon and his partners have been building since the collapse of Terra USD (UST). It is a blockchain project built on Cosmos that hopes to become the best place for developers to build decentralized applications (dApps).
Terra 2.0 has focused mostly on projects that were in the original ecosystem. Some of the most notable projects in its ecosystem are Astroport, Coinhall, Eris Protocol, and Falcon Wallet among others. Terra 2.0 has funded most of these projects.
Terra LUNA price has been in a strong bullish trend in the past few weeks as investors bought the dip. As we wrote at the time, this rally had all signs of being a pump and dump scheme. For one, it is hard to see any value in the ecosystem that led to over $50 billion in losses.
LUNA price has dropped sharply in the past few days after reports emerged that Do Kwon as facing arrest in South Korea. A court in the country has also issued arrests for six more people associated with Terra. Also, there are reports that Kwon’s passport has been canceled.
The statement came a few weeks after Do Kwon said that he had not talked with South Korean prosecutors. Therefore, there is a likelihood that exchanges offering LUNA and its associated coins will pause or even delist it.
Terra LUNA price prediction
The four-hour chart shows that LUNA price has been in a strong bearish trend in the past few days. It crashed and reached a low of $2.2181, which was the highest point on September 1. The coin’s 25-day and 50-day moving averages have also made a bearish crossover pattern, which is usually a bearish sign. At the same time, the Relative Strength Index (RSI) has moved slightly above the oversold level.
Therefore, there is a likelihood that the Terra price will continue falling in the near term. However, caution is warranted since this crash means that the coin could become a short squeeze target. As such, it will not be a surprise if the token rebounds.
