Terra (LUNA) faces the prospects of hitting $100 within the coming weeks because it paints a basic bull pennant construction.

Intimately, bull pennants seem as the worth traits inside a triangle sample after a powerful transfer upside. Many analysts see it as an indication of bullish continuation, i.e., they assume the instrument would ultimately break above the triangle’s higher trendline to resume its price rally higher.

Moreover, the revenue goal of a bull pennant construction sometimes involves be the size equal to the scale of the earlier value rally, known as flagpole, when measured from the breakout level. Because it seems, LUNA has been forming a similar pattern on its lower-timeframe chart.

LUNA/USDT four-hour chart that includes Bull Pennant setup. Supply: TradingView

Contemplating the breakout occurs on the level the place the bull pennant trendlines converge — the apex — the perfect revenue goal comes out to be over $22, the flagpole peak. That places LUNA on the street to nearly $100.

Supportive bullish catalysts

The bullish technical setup within the Terra market appeared as LUNA rallied almost 65% in lower than three weeks to turn out to be the tenth-largest cryptocurrency by market capitalization.

The digital asset jumped previous Dogecoin (DOGE) and Avalanche (AVAX) to worth over $28.60 billion, nearly 1.18% of the present whole cryptocurrency market valuation of $2.30 trillion. In the meantime, LUNA’s token value climbed from $43.50 to over $77 on Dec. 5, a brand new all-time excessive.

LUNA circulating market capitalization. Supply: Messari

Merchants took cues from Chiron Partners, a Hong Kong-based venture capitalist firm, that introduced Dec. 8 that it had raised $50 million for a devoted fund, dubbed Chiron Terra Fund I, to construct decentralized finance (DeFi) and metaverse-linked nonfungible token (NFT) tasks atop the Terra blockchain.

Jake Cormack, chief working officer at Chiron Companions, credited Terra’s development potential behind their resolution to decide on them as their official public ledger, notably after the blockchain’s recent Columbus-5 upgrade, which promises to enable higher scalability and greater cross-chain interoperability.

Deflation FOMO

In detail, the Terra ecosystem consists of a family of stablecoins pegged to a growing list of fiat currencies and a mining token, LUNA. LUNA serves as a governance token, volatility absorption tool, and rewards catcher by means of “seigniorage” and transaction volumes. 

The volatility absorption function, particularly, proves to be the most bullish case for LUNA. Notably, the Terra ecosystem maintains its stablecoins fiat-peg by burning LUNA tokens. In different phrases, if the worth of Terra’s native stablecoin TerraUSD (UST) goes above $1, the protocol burns LUNA to mint extra UST, thus bringing its worth again to $1.

Conversely, if the UST worth goes under $1, the protocol swaps the stablecoin for LUNA to prop up its costs. With the Columbus-5 improve and Chiron’s $50-million fund promising to carry extra tasks to the Terra ecosystem, anticipations of extra deflationary strain on LUNA have been rising.

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As Cointelegraph reported, UST stablecoin adoption is growing with its web provide hitting a brand new document excessive of $8.221 billion on Dec. 8. However, in response to TerraAnalytics, the Terra protocol has burned greater than 104 million LUNA tokens ever because the Columbus-5 improve went reside on the finish of September. 

Talis’s $2.3M NFT market

Bullish cues for LUNA earlier than the Chiron announcement additionally got here within the type of Talis. The startup raised $2.3 million in funding led by ParaFi Capital and Arrington Capital to construct an NFT market on the Terra blockchain.

LUNA/USDT versus BTC/USD day by day value chart. Supply: TradingView

Two days after the announcement, LUNA rose nearly 13% to achieve its new all-time excessive despite a major correction in Bitcoin (BTC), Ether (ETH), and most different cryptocurrencies. 

The views and opinions expressed listed below are solely these of the creator and don’t essentially mirror the views of Cointelegraph.com. Each funding and buying and selling transfer includes threat, it’s best to conduct your personal analysis when making a call.