The LUNA price has lost momentum after staging a major rally in the past few weeks. The Terra price is trading at $36.37, which is about 26% below the highest level on October 4. This drop has pushed its total market capitalization to more than $14 billion, making it the 11th biggest cryptocurrency in the world.
Terra loses momentum
In the past few months, Terra has moved from nowhere to become one of the biggest cryptocurrency in the world. The price of LUNA, its token, rose by more than 1,200% from its lowest level in May to its highest level on October 4.
This growth was driven by several factors. First, investors loved the growth of its ecosystem. For example, according to DeFi Llama, the number of DeFi applications in its ecosystem has risen to 8, bringing its total value locked to more than $7.78 billion. This makes it the fourth biggest DeFi platform in the world after Ethereum, Binance, and Solana.
Second, the LUNA price was then supercharged by the recent network upgrade. The developers recently launched what is known as Columbus-5 upgrade. This upgrade brought three key changes to the network.
These changes were divided into three, including economic changes, community pool and one, and IBC and stargayte. Therefore, it will help to better capture value, port assets across several chains, and set the foundation for a better economy.
Third, as LUNA took off, the fear of missing out also came in. Historically, retail traders tend to join-in when there is a major rally in an asset. The price is currently declining as many of these traders start to exit their trades. In other words, it has moved to the distribution zone.
LUNA price prediction
The four-hour chart shows that the Terra price formed a double-top pattern at around $50. In price action analysis, a double-top pattern is usually a bearish signal. Worse, it has moved below the chin of this pattern at around $40. It has also declined below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has been in a bearish trend.
Therefore, as the LUNA price moves into a distribution phase, there is a likelihood that it will keep falling. If this happens, the next key support level to watch will be $30, which is about 18% below the current level.
