That's why Terra Classic's price increased by 250% in September

That’s why Terra Classic’s price increased by 250% in September

Terra Classic (LUNC) outperformed all major cryptocurrencies this month, achieving an almost 100% increase in the past seven days alone.

Terra Classic reaches its all-time high

The value of the token has grown by more than 250% since the beginning of the month, reaching a price of $ 0.000594 on September 8: the highest value ever recorded. For comparison, over the same period Bitcoin (BTC) fell 4% and Ether (ETH) gained 3.5%.

The value of Terra Classic has risen despite being associated with the now defunct Terra (LUNA) token, a $ 40 billion project that collapsed in May. Terra Classic is a renamed version of the same Terra project, and has therefore been the subject of skepticism from analysts and investors since its debut.

However, it appears that traders have ignored such warnings in recent weeks, and have invested in LUNC in the wake of some technical improvements.

New staking service

On August 27, a new staking service.

According to LuncStaking_Bot, users have wagered over 610 billion LUNCs. Terra Classic’s maximum offer is $ 6.9 trillion; in other words, nearly 9% of all LUNC tokens have been removed from circulation:

StakingRewards data shows that Terra Classic staking returns users an annualized return of 37.8%: among the highest values ​​of the entire crypto industry. Such high payments may have played a role in increasing demand for LUNC, the price of which has soared by more than 450% since the launch of the staking service.

LUNC / USD chart. Source: TradingView

Burn of the LUNC token

In addition to staking, Terra Classic developers have also introduced a burning mechanism to increase LUNC scarcity.

It was Edward Kim, a member of the Terra Classic community, who proposed one fee of 1.2% on all on-chain transactions. These funds would end up in an inaccessible address, effectively removing a portion of the supply from circulation.

“The value of Terra Luna Classic has soared 37,000% from the bottom after the collapse of Earth.

This comes after a proposal to implement a 1.2% token burn tax on all transactions, which would allow LUNC to become a deflationary cryptocurrency. “

Crash risk

However, some technical indicators show that LUNC risks a sharp correction in the short term. These include his daily Relative Strength Index (RSI), which topped 90 on September 8, indicating that the asset is heavily overbought.

LUNC / USD chart. Source: TradingView

Additionally, LUNC’s recent earnings are accompanied by quite low volumessuggesting that traders do not believe in the longevity of this rally:

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