Coming back from the crypto underworld, the LUNC price has experienced a massive bull-run over the past 30 days. The native token for the Terra Classic network, LUNC has been the subject of a lot of controversy as it lost over 99% of its value in a single year.
At the time of writing, LUNC price trades at $0.0005 with a 23% profit in the last 24 hours and a 140% profit over the past week. Data from Coingecko records a total of over 400% profits in two weeks alone, but is this price action sustainable?
LUNC Price Shorts Pile In, Will They Get Rekt?
As LUNC price trends to the upside, the funding rates across the derivatives sector turned negative. This metric indicates the number of traders taking longs or shorts and the percentage that a side pays the others.
If funding rates are negative, most market participants are short or betting on the price to crash, the opposite is true when funding rates are positive. According to a pseudonym user, the funding rates for the LUNC/USDT pair reached -0.48% at some point during today’s trading session.
In other words, short positions piled up on LUNC price bullish momentum. As a result, these positions could be liquidated if the cryptocurrency continues to trade to the upside and fuel the bull run much further.
In the past 12 hours, the LUNC/USDT trading has experienced a spike in Open Interest (OI). Data from the OI Bot claims the cryptocurrency saw an increase of around 30% on this metric with positions adding millions of dollars in a short span of time.
Huge Open interest variation spotted on : $LUNC
OI increased by 16.63% these last 5 minutes!
More than 2,939,702$ added.⬆️⬆️
— OIB – Crypto Open Interest Variations Bot (@OIAlertBot) September 8, 2022
What’s Behind The LUNC Price Rally?
The LUNC price action has been supported by a new community proposal to implement a burn mechanism for the cryptocurrency. The proposal was submitted on late July 2022 and approved a few weeks later.
Some people seem to be betting on LUNC making a comeback based on this new mechanism that will “Burn” 1.2% of the cryptocurrency’s supply while re-enabling the staking mechanism. The proposal claims:
The Terra v1 governance community (which includes validators) must decide the appropriate trusted distribution path for the code for these two proposals. This proposes the following code, the following distribution path, as well as a preventative security measure.
Time will tell if the burning mechanism will be enough to drive LUNC price back to its former glory or if this rally will be short-lived before the cryptocurrency returns to its former lows.