May 23, 2022 04:56AM ET
Volatile cryptocurrency Terra (LUNA) rose 100% over the weekend. This followed a 100% drop in its price earlier this month. In that tragic fall, its stablecoin TerraUSD (UST) was decoupled from the dollar, wiping billions of dollars from investors' assets. It also attracted a degree of regulatory scrutiny over stablecoins.
As of this writing, Terra (LUNA) has appreciated 30.69%, according to CoinMarketCap data. Let's take a look at some of the possible reasons why LUNA is pumping.
The first possible reason why LUNA is pumping may be related to the proposal by the founder of the Do Kwon project to burn the Terra Luna token and limit the supply to 1 billion. This process involves sending LUNA to an off-chain "burned" wallet address that can only be used to receive cryptocurrency and for no other purpose, which in turn reduces the overall supply.
Another possible reason for the pumping of LUNA recently is that it is really difficult for traders to short LUNA, as margin trading for LUNA and UST pairs has been removed from most exchanges in the crypto space.
Eventually, Do Kwon suggested that the Terra network will be "hard forked" and the Terra Luna token will be transferred to a new chain. The majority of the Terra community responded positively to this idea, with over 80% of the community in favor of a hard fork.
For now, investors are in limbo with the LUNA network, waiting to see what the future of the Terra network will be. Some investors are looking to capitalize on the reduced price of LUNA, while others claim the coin is dead.