LUNA outperforms the market as it closes the week higher by over 40%.
LUNA gains were driven by the formation of a UST reserve worth $1 billion in BTC.
LUNA needs to break through key weekly resistance if the uptrend is to continue.
Terra (LUNA) is a blockchain that is used for the launch of algorithmic stable coins. It has come to dominate in this space and is now among the top DeFi platforms in terms of Total Value Locked.
Like the rest of the market, LUNA has been pretty volatile over the last couple of days but has regained upside momentum in the last 48-hours. In fact, it was one of the biggest gainers of the past week, closing higher by over 40%.
$1 Billion Bitcoin reserves boost LUNA
In the past week, the markets were hit with the news that Luna Foundation Guard (LFG) was creating a Bitcoin-denominated reserve. This will act as an extra layer of stability and security for Terra USD (UST).
LFG also announced that it had raised $1 billion that will go towards building the Bitcoin reserves. The best part about it is that the coins will be locked for 4-years. This news has led to an increase in investor confidence in UST, which in turn translates to higher demand for LUNA.
Analysts are already responding positively to the move to create a Bitcoin reserve. According to Matthew Dibb of Stack Funds, the move will lower the price fluctuations of the UST.
Should you buy Terra (LUNA)?
On February 26th, 2022, Terra (LUNA) was trading at $74.34 and was up by 13% in 24-hours.
LUNA has been on a strong uptrend since February 24th, 2022. It is currently trading just below the $77.17 weekly support level.
If buying volumes increase and LUNA pushes through the $77.17 resistance, then it could test prices above $90 before the end of February.
On the flip side, if LUNA turns bearish and breaches the $70.11, 23.6% Fibonacci support, then it could end the month below $65.