LUNC and SHIB might never hit their 1 cent targets because they are grappling with slow token burns. Despite community efforts and large token burns, SHIB’s supply is still massive, and LUNC's price is struggling to climb. Terraform Labs, the creator of LUNC, also recently announced that it is selling assets as part of a $4.5 billion settlement with the SEC.
SHIB and LUNC Struggle with Slow Token Burns
Shiba Inu’s (SHIB) and Terra Luna Classic’s (LUNC) goal of reaching a price of 1 cent seems to be a bit far-fetched because of slow burn rates, according to a computer systems engineer. Despite burning more than 1 trillion LUNC tokens, large gains in value have eluded the coin.
Community efforts play a very crucial role in the development and long-term value of cryptocurrencies, and dedicated groups are urging developers, executives, and crypto platforms to send tokens to burning addresses to reduce circulating supply.
Shiba Inu and Terra Luna Classic are at the forefront of crypto-burning practices. Shiba Inu’s public Layer-2 blockchain, Shibarium, burns cumulative transaction fees, which impacts SHIB’s price. In 2023, the Shiba Inu community burned 76.4 billion SHIB coins, including 9.35 billion SHIB torched on Jan. 10, 2024, by Shibarium L2 developers.
However, the remaining SHIB supply is still substantial at 589.2 trillion, despite 50% of the initial supply being sent to Ethereum founder Vitalik Buterin, who then donated 10% to India’s Coronavirus relief effort.
The engineer shared in a post on X that he actually feels sorry for the SHIB Army, and pointed out that SHIB’s burn rate lags behind LUNC’s. Meanwhile, the LUNC community has burned 1.05 trillion tokens out of the 6.78 trillion total supply, with Binance contributing to the burns in monthly batches. Despite this, LUNC’s price is down by more than 2% over the past year.
SHIB holders are pinning their hopes on automatic burns via Shibarium L2, which is slated for release by the end of 2024. This new burn system could theoretically burn billions of tokens daily, depending on activity levels. While the auto-burn mechanism is live on Shiba Inu’s ‘Puppynet’ testnet, it is still uncertain when a fixed amount of SHIB will be burned with every on-chain activity.
Mixed Technical Signals for LUNC
At press time, LUNC was worth $0.00008613 after its price dropped by over 2% throughout the past day of trading.
LUNC / TetherUS 4h chart
Now, LUNC faces some strong resistance around $0.00009254, with another barrier at $0.00009412. These levels have previously capped upward movements and will likely be crucial in determining future bullish momentum. Conversely, strong support is seen at $0.00008091 and $0.00007632. A breach of these support levels could signal a deeper pullback.
The 9 EMA currently stands higher than the 20 EMA, which suggests a short-term bullish trend. However, the gap between the two is narrowing, which could indicate potential consolidation or a reversal if the shorter EMA crosses below the longer one.
MACD values reveal a gradual decline, with the MACD line staying below the signal line, leading to a series of negative histograms. This bearish divergence indicates that selling pressure is slowly building up. Despite this, the MACD's proximity to the zero line suggests that any shift in market sentiment could quickly alter this outlook.
Meanwhile, the Relative Strength Index (RSI) fluctuates around the neutral 50 level, with recent values slightly above 50 indicating modest bullish momentum. However, the RSI's movement is not strong enough to confirm a definitive trend. It might be better for traders to watch for more decisive action either above 70 for a bullish signal or below 30 for a bearish one.
Overall, the LUNC 4-hour chart presents a very mixed bag of signals, with potential for both bullish and bearish movements. This also means that LUNC’s 1 cent dreams are still far away.
Terraform Labs to Sell Assets as Part of SEC Settlement
Bankrupt crypto firm Terraform Labs is looking to sell four of its businesses as part of a $4.5 billion settlement with the United States Securities and Exchange Commission (SEC) that will lead to the winding down of its operations. On July 9, Terraform announced that it is exploring options to sell its portfolio tracking platform Pulsar Finance, crypto wallet platform Station, no-code decentralized autonomous organization (DAO) management platform Enterprise, and smart contract automation protocol Warp.
Terraform bought Pulsar Finance in November of 2023, shortly before filing for Chapter 11 bankruptcy in Delaware in January. The company launched Enterprise a year earlier in November 2022. Despite its bankruptcy, Terraform still continues to develop its Warp protocol and Station wallet.
The goal of the sale is to "maximize value for its creditors and other stakeholders" and is part of its broader strategy to wind down operations under the settlement terms with the SEC. Last month, Terraform reached a $4.5 billion settlement with the SEC, and agreed to pay almost $3.6 billion in disgorgement, a $420 million civil penalty, as well as approximately $467 million in prejudgment interest.
Additionally, co-founder and former CEO Do Kwon agreed to pay $110 million in disgorgement, $14.3 million in prejudgment interest, and an $80 million civil penalty. The settlement also effectively bans Kwon and Terraform from the crypto industry, and concludes the SEC's February 2023 lawsuit charging them with securities law violations and fraud.
Terraform created the cryptocurrency Terra Luna Classic (LUNC), which was linked to the US dollar algorithmic stablecoin TerraUSD (UST), now known as TerraClassicUSD (USTC). The stablecoin lost its peg to the dollar in May of 2022.
