On August 19, LUNA recorded its all-time high of about $33.4 with a 7-day gain of 72%. But why did the price of this 14th cryptocurrency by market cap skyrocket?
Despite the spike, Terra (LUNA) fell to about $29 in the following 24 hours, with a market cap of $12.115 billion. The coin's 24-hour trading volume dropped 50% to $1.475 billion.
So far, it's difficult to predict where the price will move next. However, experts, including Coin Bureau, predict that the price of LUNA could rise and reach $100 before the end of 2021 if adoption and innovation continue to grow.
One of the reasons why the price of Luna has reached a peak is that Wrapped Luna and TerraUSD (UST) both became tradable on the US-based cryptocurrency exchange Coinbase Pro. UST is one of the fastest growing stablecoins on the market and its market cap increased about tenfold by 2021. LUNA is used to collateralize TerraUSD.
In addition, the popularity of UST and LUNA has increased due to the hype of the following two Terra-based applications: Mirror and Anchor. The increase in demand for TerraUSD triggered an increase in demand for LUNA. However, there is a deflationary effect as LUNA is burned every time UST is mined.
The third factor driving the growth of Terra's Luna price is the recent announcement of Terra's upcoming upgrade called Columbus-5.
The Terra upgrade, named Columbus-5, will ensure that multiple applications can be effectively created on the network, and this is likely to create significant financial incentives for users and stakers. In general, the above factors have caused the value of Terra's Luna token to rise. Nevertheless, it is still unclear whether this upward trend can develop into a long-term trend.